Big financial services exchange traded funds are getting bigger as investors flock to these ETFs as the sector continues soaring.
The Financial Select Sector SPDR (NYSEArca: XLF), the largest financial services exchange traded fund, iShares U.S. Financials ETF (NYSEArca: IYF) and Vanguard Financials ETF (NYSEArca: VFH) are gathering assets at a rapid pace as the second-largest sector weight in the S&P 500 ascends to its highest levels in about a decade.
“This year, investors have poured a combined $2.4 billion into three exchange-traded funds focused on banks — State Street Corp.’s Financial Select Sector SPDR fund, ticker XLF, BlackRock Inc.’s iShares U.S. Financials ETF, ticker IYF, and the Vanguard Financials ETF, ticker VFH — as a bet that the firms will benefit from Trump’s deregulation policies. The funds’ top holdings are global lenders like JPMorgan Chase & Co. and Wells Fargo & Co.,” reports Carolina Wilson for Bloomberg.
The Trump administration’s expansionary policies would be especially beneficial for banks since the segment is sensitive to the overall economy. Moreover, the expansionary policies have fueled bets of increased Federal Reserve interest rate hikes to rein in a potentially overheating economy and rising inflation, which further supports lending revenue and their bottom line among bankers and insurers.