Clobbered Sector ETFs Offer Bargain Plays | ETF Trends

Exchange traded funds that track some of the worst areas of the year were among the best performers Tuesday as bargain hunters piled into downtrodden sectors.

Consumer discretionary and bank stocks were led the advance in U.S. markets on Tuesday. For instance, the PowerShares KBW Bank Portfolio (NYSEArca: KBWB) gained 3.3%, SPDR S&P Bank ETF (NYSEArca: KBE) rose 3.3%, SPDR S&P Regional Banking ETF (NYSEArca: KRE) increased 3.1% and iShares U.S. Regional Banks ETF (NYSEArca: IAT) advanced 3.6%. [Bank ETFs Down but Not Out]

“I think the larger focus has now switched to financial stocks,” Peter Jankovskis, co-chief investment officer of OakBrook Investments, told Bloomberg. “People turned their focus on the impact of negative rates spreading around the world, and the impact that might have on banks’ profits.”

The broader Financial Select Sector SPDR (NYSEArca: XLF), which includes a 34.8% tilt toward the bank sector, rose 2.0% Tuesday, but the fund was among the worst performing S&P 500 sector-related ETFs, falling 14.0% year-to-date.

Banks and the financial sector have been losing momentum on concerns that weaker economic growth would push off a Federal Reserve rate hike and the increased credit risk in the energy sector due to the collapse in oil prices.