For investors seeking momentum, SPDR S&P Regional Banking ETF KRE is probably on radar. The fund just hit a 52-week high and is up more than 41% from its 52-week low price of $54.14/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
KRE in Focus
SPDR S&P Regional Banking ETF provides exposure to the regional banks segment of the broad financials sector. It charges 35 basis points in annual fees (see: all the Financials ETFs here).
Why the Move?
The banking space in the broad U.S. stock market has been an area to watch given the rise in yields. The U.S. Treasury yields are surging at the fastest New Year pace in 20 years on Fed’s faster-than-expected policy tightening and skyrocketing inflation. A rising rate environment is highly beneficial for the financial sector, especially banks. As banks seek to borrow money at short-term rates and lend at long-term rates, the rise in interest rates will earn more on lending and pay less on deposits, leading to a wider spread. This will expand net margins and increase banks’ profits.
More Gains Ahead?
Currently, KRE has a Zacks ETF Rank #2 (Buy) with a High risk outlook, suggesting that the outperformance could continue in the months ahead. However, many spaces that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.
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SPDR S&P Regional Banking ETF (KRE): ETF Research Reports
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