The largest U.S. Financials based equity ETF in terms of assets under management, Financial Select Sector SPDR (XLF) — expense ratio 0.18%, has been the leader across all products in net asset inflows over the past several sessions, raking in north of $800 million.
In ETF options, financials continue to be in focus heading into earnings season, as XLF April 16 puts have been the primary play. Some of the top components are reporting quarterly earnings this week, including JP Morgan (JPM), Goldman Sachs (GS), Citigroup (NYSE: C), Bank of America (BAC) and Morgan Stanley (MS).
It seems that institutional investors may be hedging against a potential reversal in the sector if not outright speculating on a downturn. [Financial ETF Near Four-Year High Eyes Breakout]
Top weighted component Wells Fargo (WFC) already reported quarterly earnings last week.
Given the sector’s notable outperformance to broad market proxies in the trailing one year period, it would make conceptual sense if holders of the sector ETF if not the underlying stocks in the Financial sector are looking to lock in and/or protect recent gains. [Financial ETFs Set Pace for S&P 500]
After the “gap up” in the sector to begin 2013 and with XLF trading at its highest levels since November of 2008, other Financials ETFs to keep an eye on in the near term include KBE (SPDR KBW Bank ETF, Expense Ratio, 0.35%), KRE (SPDR KBW Regional Banking, Expense Ratio 0.35%), IYF (iShares U.S. Financial Sector, Expense Ratio 0.48%), and FXO (First Trust Financial AlphaDEX, Expense Ratio 0.70%) to name a few.
Financial Select Sector SPDR
- Bank of America
- Morgan Stanley