Bank-heavy ETFs see brisk demand amid rising interest rates

Bank-heavy ETFs see brisk demand amid rising interest rates
A steeper yield curve can help banks earn more on the money they lend out.
SEP 24, 2018

Investors of exchange-traded funds are chasing chunky yields and pouring cash into strategies holding banks, hoping to profit from higher interest rates. The $33 billion Financial Select Sector SPDR Fund (XLF) took in $942 million last week, the most since December. Buyers also grabbed the $5.3 billion SPDR S&P Regional Banking ETF (KRE), which added $475 million over the five days, its largest weekly inflow since early December. "Financials led sector inflows for the first time in weeks as investors appeared to position themselves for a higher interest-rate environment," said Christian Fromhertz, chief executive officer of Tribeca Trade Group. (More: Investors pour money into ETF ahead of index reorganization)​ https://www.investmentnews.com/wp-content/uploads/assets/graphics src="/wp-content/uploads2018/09/CI117165924.PNG"

Yields on benchmark 10-year Treasury notes have been hovering above 3% since Sept. 18. Banks typically like to borrow short and lend long, so a steeper yield curve can mean a larger net interest margin. Equity portfolio managers like Yana Barton at Eaton Vance said the widening spread could be key for investors. "We're positive on financials because there's still some value," Ms. Barton said in an interview last week. "Higher rates means they can lend out here and charge this, so they can have a bigger spread." (More: Structured ETFs offer fresh twist on popular variable annuity strategy)

Latest News

Captrust adds $1.25B Pennsylvania firm in latest push into private wealth
Captrust adds $1.25B Pennsylvania firm in latest push into private wealth

The top-ranked RIA by total AUM continues to scale its wealth management arm, bringing its Pennsylvania presence to five offices.

WallStreetBets takes on the SEC — and makes a surprisingly sharp case
WallStreetBets takes on the SEC — and makes a surprisingly sharp case

The Reddit trading community's formal comment letter against the proposal is drawing widespread attention across finance and tech circles.

Frustrated former advisor launches AI-powered CRM with $8B RIA client
Frustrated former advisor launches AI-powered CRM with $8B RIA client

Chicago Partners Wealth Advisors is helping shape the platform's product roadmap after switching from a legacy system.

Stratos Wealth Holdings closes 11 acquisitions in push for advisory scale
Stratos Wealth Holdings closes 11 acquisitions in push for advisory scale

RIA aggregator adds $4.8 billion in client assets across seven states as demand grows for alternatives to traditional succession models.

Beyond wealth management: Why the future of advice is becoming more human
Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline