Looking ahead, analysts project U.S. bank earnings to expand 12.8% in 2018, and BlackRock sees “scope for this number to improve.” Furthermore, the sector is trading at cheap valuations, with U.S. banks discounted by 24% compared to 5% for European banks.

“As sentiment starts to curl the other way, as expectations start to turn toward higher rates, we think the financial sector is in a terrific position to start to outperform again and break out to the upside,” Wald said, reports CNBC.

Financials are widely viewed as the one sector in the U.S. that has the look of a legitimate value opportunity. Investors have added $1.1 billion to XLF since the start of the fourth quarter.

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.