ETF Trends
ETF Trends
  • Investors have been sticking to the sidelines over a volatile first quarter
  • This has dragging on ETFs that track investment banks and brokerage firms
  • Wall Street’s busy season is underway, but for bank traders, market activity has been surprisingly tepid

Trading activity usually picks up at the start of the year, but investors have been sticking to the sidelines over a volatile first quarter, dragging on exchange traded funds that track investment banks and brokerage firms.

For instance, the iShares US Broker-Dealers ETF (NYSEArca: IAI), which tracks U.S. investment banks, discount brokerages and stock exchanges, declined 10.4% year-to-date while the SPDR S&P Capital Markets ETF (NYSEArca: KCE), an equal-weight rival to IAI, decreased 13.0%. In contrast, the broader Financial Select Sector SPDR (NYSEArca: XLF) dropped 6.0% so far this year.

Wall Street’s busy season is underway, but for bank traders, market activity has been surprisingly tepid.

“We’re clearly not seeing that normal seasonality,” Jonathan Pruzan, Morgan Stanley ’s finance chief, told the Wall Street Journal, pointing to the lack of usual first-quarter bump.

The first quarter is typically marked as the most active on Wall Street trading desks as institutional-sized investors like hedge funds put their money to work in the new year.

However, current activity is starting to mirror the continued disappointing final months of 2015 when economic growth concerns and depressed commodity prices dragged on trading activity and diminished revenue for major banks. Volatile markets pushed corporate clients to postpone stock offerings early this year, weighing on investment-banking businesses as well.

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