Despite historically low-interest rates weighing on bank earnings, the Financial Select Sector SPDR Fund (NYSE: XLF) is up 27.5% in 2021, more than double .
By Patturaja Murugaboopathy (Reuters) - Investment into U.S. exchange traded funds (ETFs) has risen to record levels this year, driven by a rally in e.
Bank stocks are on pace for what could be their best year on record when compared to the S&P 500, the Wall Street Journal reports.
After years of underperformance, the bank sector is finally enjoying a moment of outperformance. Analysts argued that the sector remains cheap, and many shareholders view the industry as a relatively safe play that would benefit from the economic recovery.
The KBW Nasdaq Bank Index is up 37% and the KBW Nasdaq Regional Banking Index up 38% this year while the S&P 500 is 11% higher. In comparison, the big-bank index declined nearly 14% last year, underperforming the S&P 500 by 30 percentage points.
Value-Oriented Sector ETFs Driving Flows in 2021 U.S. sector and industry ETFs gained in popularity in 2021 as investors sought targeted exposure to the Energy, Financials, and Materials.
U.S. sector/industry-focused equity ETFs pulled in $35 billion this year. While the U.S. broad market equity ETFs such as
Vanguard S&P 500 ETF (VOO) and
Vanguard Total Stock Market ETF (VTI) continue to gather significant assets in 2021, investors have also increasingly used ETFs to tactically target certain sectors or industries. Indeed, while all but two GICS sectors were represented in the 20 ETFs with the largest net inflows year-to-date through May 5 as shown in Figure 1, nine of the 20 most popular sector ETFs were either in the value-oriented Energy or Financials sectors. Meanwhile, Industrials and Materials sectors each had three. Only the defensive Consumer Staples and Utilities sectors were not represented.