Citigroup & Bank Of America May Add Fuel To The Rally In This Financial ETF

“Among the major trends in the most recent quarter,financial ETFs were the best-performing sector, small stocks beat large-caps, and value outperformed growth,” John Spence Reports From MarketWatch.

Spence goes on to say, “The SPDR KBW Bank ETF (KBE) was among the top-performing funds that doesn’t use leverage to magnify daily returns. It rose 22.1% in the first quarter as bank stocks benefited from low short-term interest rates and signs that credit losses are easing . The fund’s top four holdings are Bank of America Corp. (BAC) , Citigroup Inc. (C) , Wells Fargo & Co. (WFC) and J.P. Morgan Chase & Co. (JPM). Bank stocks rose on improvement in the economy and credit markets, although increased regulation after the financial meltdown remains a wildcard for the industry.”

Despite their strong start to 2010, “we think there’s additional upside to bank stocks given credit and net interest margins continue to improve, the bulk of bank capital raises are behind us, and most macro trends are moving in the right direction,” Deutsche Bank analysts wrote in a sector earnings preview.

“And while we think macro risks remain (especially related to real estate and the U.S. government spending gap), we don’t expect these to be near-term issues,” the analysts added. “In addition, we think more banks will talk about becoming profitable at some point this year.”

With a great jobs number out on Friday and chatter about banks becoming profitable in 2010,  investors may have more confidence in the markets than ever sending financial stocks much higher.    The SPDR KBW Bank ETF has favorable weightings in Bank of America Corp. (BAC) , Citigroup Inc. (C) ,  and Wells Fargo & Co. (WFC) with assets of  8.98%, 7.30%, & 7.19% respectively. 

Here are some details on the SPDR KBW Bank ETF (KBE) including the holdings within the ETF below:

The investment ETF (KBE) seeks to replicate the performance of the KBW Bank index. The fund uses a passive management strategy designed to track the total return performance of the Bank index. It is nondiversified.

Related posts:

1. US Financial Stocks Up After Bank Of America Upgrade (ETF: XLF, KBE, KRE)
2. Financial Sector Play: Large vs. Regional Banks (ETF: KBE, KRE)
3. Big banks rally, lifting broader sector; (XLF, KRE, KBE)

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