The Financial Select Sector SPDR (NYSEArca: XLF), the largest financial services exchange traded fund, is up 6.3% year-to-date, bringing its one-year gain to almost 40%. As has been widely noted, politics are playing a part in lifting the financial services sector, the second-largest sector weight in the S&P 500.

Some on Wall Street are buying into the notion that President Donald Trump’s efforts will support more upside for the sector.

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.

Some analysts believe investors’ new found faith in the financial services sector will ultimately be rewarded. XLF and rival financial services ETFs have been bolstered this year after President Donald Trump revealed plans to scale back 2010 Dodd-Frank legislation, which increased regulations on banks and financial services companies following the global financial crisis.

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