Consequently, the wider discrepancy between deposit and prime rates could translate to improved profit margins and a potentially stronger financial sector ahead. [Bank Sector ETFs Could Lead as Rates Rise]
ETF investors can also capitalize on the shift in banking policies through diversified financial sector plays, such as the iShares U.S. Financials ETF (NYSEArca: IYF), Financial Select Sector SPDR (NYSEArca: XLF) and Vanguard Financials ETF (NYSEArca: VFH).
The major banks that have changed their prime rates are among these financial sector ETFs’ top holdings. For instance, IYF includes WFC 6.4%, JPM 6.1% and BAC 4.5%. XLF holds WFC 8.7%, JPM 8.3% and BAC 6.1%. Lastly, VFH includes WFC 6.7%, JPM 6.1% and BAC 4.5%.
Financial Select Sector SPDR
For more information on the financial sector, visit our financial category.
Max Chen contributed to this article.