Regional Banks In The Sweet Spot
Sector Pick: SPDR KBW Regional Banking (KRE)
Welcome back to Sector Scout, an ETF Radar weekly blog that covers sector ETF opportunities. This week, my sector pick is the SPDR S&P Regional Banking (KRE). This ETF started last year holding steady until a huge drop over the summer and into the fall. It started to recover in October, had another drop in late November and is once again in an uptrend. In fact it went above its 200 day moving average just before Christmas. This fund is part of the financial sector and represents the regional banking industry. This ETF holds mainly smaller local banks which haven’t been hit as hard as the “Too Big to Fail” banks in the news everyday. These banks have less exposure to Europe’s problems. So while this sector as a whole did not do particularly well in 2011, there is a short term play here.
SPDR S&P Regional Banking ETF tracks the performance of regional banks. This fund was launched on June 19th 2006. It has an expense ratio of 0.35%, an average weighted market cap of $3 billion and an average daily trading volume of $2.7 million shares. The fund’s top holdings include CapitalSource Inc (CSE), Webster Financial Corp (WBS), Trustmark Corp (TRMK, BB&T Corp (BBT), and Zions Bancorporation (ZIONW).
David Cohne, is Head Strategist Americas at ETF Radar. You can reach him directly under davidcohne [at] etfradar.com