The market's recent correction and the financial overhaul bill
that's winding its way through Congress haven't stopped analysts
from feeling bullish on financial exchange traded funds (ETFs).
The financial overhaul bill that passed in the Senate is a
far-reaching one that would vastly increase the regulatory
oversight of Wall Street's largest banks. The legislation is meant
to prevent a repeat of what happened in 2008, but it also will give
the Federal Reserve greater power. Now the House and the Senate
have to come to some sort of an agreement, which could be several
reports David M. Herszenhorn for
The New York Times
What Regulation Will Mean for Financial ETFs.
The overhaul has gotten mixed reactions both politically and
There are a lot of reasons to hate the banking industry, but
there are also a lot of investment opportunities to be had in
writes Michael Brush for MSN Money
- While many fear that it could constrain growth and cut into
the U.S.'s financial power, history has shown that banking
investments move in a typical pattern, which may make this the
beginnings of some good times for bank stocks, adds Brush.
- Brush also points out that banking investments are really
cheap since bank shares have been pummeled by the European debt
crisis, but investors may find a richer selection of winners
among regional banks in terms of value and potential.
- U.S. banks posted $18 billion in profits, their biggest in
two years during the first-quarter earnings season.
Interestingly, the bigger banks such as JPMorgan Chase (NYSE:
), Citigroup (NYSE:
) and Wells Fargo (NYSE:
) have become profitable again, while smaller banks are failing
at a faster pace,
- Despite the pending overhaul, analysts are still bullish in
the long run,
says Brendan Conway for
The Wall Street Journal
They cite an economic recovery, improving credit and consumers
more willing to spend as outweighing worries about events
overseas or overvaluations.
Right now, though, financial ETFs are getting beat up along with
the rest of the market and have fallen below their long-term trend
lines (the 200-day moving average). If the analysts are right,
though, many of these funds could be a prime opportunity when the
trends reappear - the question is, when will that happen? [
Look Under the Hood of Financial ETFs.
For more information on the financial industry, visit our
Financial Select Sector SPDR (NYSEArca:
iShares Dow Jones US Financial Sector (NYSEArca:
iShares Dow Jones US Financial Services (NYSEArca:
iShares S&P Global Financials (NYSEArca:
Vanguard Financials ETF (NYSEArca:
SPDR KBW Bank (
Regional Bank HOLDRS (NYSEArca:
KBW Regional Banking ETF (NYSEArca:
iShares Dow Jones U.S. Regional Banks Index Fund
Max Chen contributed to this article.