Financial stocks and bank sector-related exchange traded funds have been among the worst areas of the market this year, but after the steep declines, investors may find a cheap play.
The financial sector is the worst performing S&P 500 sector this year, with the Financial Select Sector SPDR (NYSEArca: XLF) down 17.5% year-to-date. However, some market observers see opportunity after the fall off.
“We’re getting into serious overshoot territory,” Philippe Bodereau, a portfolio manager focused on bank securities at Pacific Investment Management Co., told Bloomberg. “We think there are very cheap valuations across the capital structure and that the sell-off is overdone. It’s an excellent buying opportunity.”
For instance, bank stocks surged Friday after JPMorgan & Chase (NYSE: JPM) CEO Jamie Dimon bought $26.6 million worth of the company’s stock after the banking sector rout, reports Hugh Son for Bloomberg.
JPM jumped 7.7% Friday.
Meanwhile, bank sector ETFs were among the best performers on Friday. The PowerShares KBW Bank Portfolio (NYSEArca: KBWB) gained 4.6%, SPDR S&P Bank ETF (NYSEArca: KBE) rose 4.3%, SPDR S&P Regional Banking ETF (NYSEArca: KRE) increased 4.2% and iShares U.S. Regional Banks ETF (NYSEArca: IAT) advanced 3.6%. JPM makes up 8.5% of KBWB’s underlying portfolio and 2.6% of KBE.