Regional bank ETFs suffer as housing market cools

Regional bank ETFs suffer as housing market cools
Investors worry rising rates might slow lending and raise the amount the banks have to pay customers in interest.
DEC 03, 2018
By  Bloomberg

With interest rates rising and the housing market slumping, exchange-traded fund buyers aren't banking on regional banks. Investors pulled $547 million from the $4 billion SPDR S&P Regional Banking ETF (KRE) in November, its biggest monthly outflow since January 2015 and the second straight month of net withdrawals. Meanwhile, the $3 billion SPDR S&P Bank ETF (KBE), which owns a broader swath of banks including regionals, saw more than $213 million leave the fund last month, the most since May and its seventh month of outflows in the last eight. https://cdn-res.keymedia.com/investmentnews/uploads/assets/graphics src="/wp-content/uploads2018/12/CI118137123.PNG"

Banks have come under pressure recently as investors worry that rising rates might slow lending and raise the amount the firms have to pay customers in interest. The KBW Regional Banking Index has underperformed the broader market this year. You can see it in KRE, which has fallen more than 5% in 2018 compared with a more than 4% gain in the S&P 500 Index. "It's difficult to be bullish on banks when growth is decelerating and consensus revenue growth expectations are too high," Instinet analyst Bill Carcache wrote in a note on Friday. With the spread between short- and longer-term rates narrowing, many banks are saying they will tighten lending standards, which could cut into profitability by reducing the number of loans they create. In addition, a slowdown in the housing market — both pending U.S. home sales and the sales of new homes have dropped — is putting pressure on the group. (More: 10 best cities for flipping houses in 2018)

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave