Regional bank ETFs are not slowing down
MOmentum investing and regional banks seem to be joining hip. To continue to play this strength in the second quarter of 2021, investors can IShares US Regional Banks ETF (IAT).
IAT seeks to track the investment results of the Dow Jones US Select Regional Banks Index. The fund generally invests at least 90% of its assets in securities of the index and in certificates representing the securities of the index.
The Underlying Index measures the performance of the regional banking sector of the US stock market and is a subset of the Dow Jones US Bank Index. The fund is up over 30% as the US economy continues to rebound, which could cause interest rates to rise.
These higher rates could mean more income for regional banks offering loan products. One of the issues that regional banks are currently facing is loan growth, but according to a Bloomberg article, they have found a way to combat that: mergers.
Merge and Win
The Bloomberg article noted that “regional banks have teamed up in recent months to help tackle weak demand for loans as well as low interest rates and the need to increase technology spending. comes from JPMorgan and the country’s other major lenders, which are shifting to new states and spending billions each year on digital deals. “
The merger movement appears to be working so far in the first quarter of 2021.
“Even with weak growth in their lending business, regional banks were able to increase their profits in the first quarter, supported like their larger counterparts by the speed of the economic recovery and the ability to release the reserves they had previously put in. aside for bad debts, “the Bloomberg article added.
“As we move into the second half, we’ll have an economy backed by pressure,” Kelly King, CEO of Truist Financial Corp., told analysts on an earnings call.
Wider financial exposure
Investors can gain broad exposure to IShares US Financials ETF (IYF). The fund seeks to replicate the investment results of the Dow Jones US Financials Capped Index, made up of US stocks in the financial sector.
The fund generally invests at least 90% of its assets in securities of the underlying index and in certificates of deposit representing the securities of the underlying index. The underlying index measures the performance of US companies in the financial sector.
- Exposure to US banks, insurers and credit card companies.
- Targeted access to national financial stocks.
- Use to express an area view.
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