“The key to industry activity this year will be investment banking, which Bove predicts will see a sharp pickup. The reason is twofold: well-known unicorns such as car-hailing service Uber could float their shares and public companies could bring more stock to market, both stemming from current enthusiasm for equities,” according to CNBC.
Bove is bullish on Goldman Sachs (NYSE:GS). Goldman is XLF’s sixth-largest holding with a weight of almost 2.6%
Some good news for XLF and friends is that the financial services sector is widely regarded as perhaps the only sector in the U.S. that is attractively valued relative to the broader market and its own long-term averages. The financial sector valuations still look relatively cheap, compared to the broader market. The sector’s valuations are still about 25% below the average since the early 1990s.
Rivals to XLF include the Fidelity MSCI Financials Index ETF (NYSEArca: FNCL), iShares U.S. Financials ETF (NYSEArca: IYF) and Vanguard Financials ETF (NYSEArca: VFH).
For more information on the financial sector, visit our financial category.