Investors: Financial Services ETFs Require Caution

Heading into this year, many market observers expected four Fed rate hikes, a number that subsequently dropped to two and now, in the eyes of some experts, zero.

ETFs such as the Financial Select Sector SPDR (NYSEArca: XLF), iShares U.S. Financials ETF (NYSEArca: IYF) and the Vanguard Financials ETF (NYSEArca: VFH) have been under pressure following the Brexit outcome, but there are other factors at play, including the Federal Reserve’s refusal to raise interest rates to this point in 2016.

Related: Financial Sector ETFs Plunge on Brexit Contagion

“A steeper yield curve would entail short-term yields falling in relation to long-term yields, an ideal environment for banks and financial services firms who tend to lend short-term debt and invest longer term,” according to CNBC.

Click here to read the full story on ETF Trends.

Financial Select Sector SPDR