One Financial Services ETF Worth A Look, S&P Says

Home to dozens of constituents, the universe of ETFs tracking the downtrodden financial services sector leaves investors with no shortage of options. That means for all of this year, if not longer, investors have also been left with no shortage of bad options, but there might be one ETF ready to standout in the financial services arena. Standard & Poor's Equity Research says the financial service is “on the ropes...but not down for the count” and in a new research note, the firm highlights the SPDR KBW Capital Markets ETF KCE. Like its peers, the SPDR KBW Capital Markets ETF has stunk up the joint recently, tumbling more than 19% in the past three months. Home to about 25 stocks, KCE lands a “marketweight” rating from S&P, but the research firm is bullish on Franklin Resources BEN and Lazard LAZ, which combine for over 12% of KCE's weight. KCE has a dividend yield of 2.24% and a gross expense ratio of 0.35%, which compare favorably to other capital markets ETFs, and also receives favorable assessments for the S&P Fair Value and S&P Risk Assessment inputs, S&P said in its report. Over the past three months, KCE has performed in lockstep with its rival, the iShares Dow Jones Broker-Dealer Index Fund IAI and it's easy to see what the problem has been for both ETFs. Goldman Sachs GS accounts for over 8% of IAI's weight and over 6% of KCE's. KCE has the lower expense ratio (IAI shows 0.47%), but IAI has about $53 million in assets under management compared to around $43 million for KCE. The iShares Dow Jones Broker-Dealer Index Fund also holds 25 stocks.