Hello ETF fans, Mike here with a timely spotlight on a segment of the market that’s been making headlines: the financial sector, and more specifically, regional banks.
Following the recent news from Zion’s Bank Corp and Western Alliance Bank Corp regarding significant loan-related issues, we saw a widespread sell-off across regional banking ETFs. This makes it a perfect time to dive into the financial sector and see how you can use our platform to analyze these developments.
A Top-Down Look at the Financials Sector
To start, let’s look at the bigger picture. From our main dashboard, navigating to the “US Sectors and Industries” view gives us a complete breakdown. The financials sector is a massive space, with just over $100 billion in assets across 32 ETFs.
We can break this down further:
- Broad-Based Financials: Home to giants like XLF and VFH.
- Banks: This category is split into broad-based large banks (like KBE and KBWB) and the regional banks that are currently in the spotlight.
Zooming in on Regional Banks
The regional banking space is led by the SPDR S&P Regional Banking ETF (KRE), the largest in the category with about $3.62 billion in assets. A quick look at its performance tells the story of the recent pressure:
- Yesterday’s Performance: Down a sharp 6.2%
- Last Month: Down 8%
- Past Year: Relatively flat, showing significant underperformance compared to the broader market and the financial sector as a whole.
The fund flows paint a similarly negative picture. The regional bank category has seen outflows of $1.6 billion year-to-date, even as the broader financials sector has attracted $2.6 billion in new assets. In the last week alone, KRE saw outflows of $400 million, a number that’s likely to increase as yesterday’s trading is fully accounted for.
Technicals and Holdings: A Look Under the Hood
For a deeper analysis, we can click directly on KRE to access its dedicated research dashboard.
Technicals:
The recent price action has pushed KRE through key technical levels. It easily broke below its 50-day moving average and is now approaching technically oversold territory. Looking at the Bollinger Bands, the price is pushing two standard deviations below the moving average, which signals significant selling pressure.
Portfolio Visualizer:
Hopping into the portfolio visualizer reveals a sea of red from yesterday’s performance. The very companies that triggered the sell-off are among the hardest hit:
- Zion’s Bank Corp (ZIONS): Down 13%
- Western Alliance Bank Corp (WAL): Down 10.81%
Almost every holding was in the red, with Triumph Financial (TFIN) being a notable exception, managing to buck the trend. Our visualizer allows you to explore all the underlying holdings and dig into various data points like profitability and other financial metrics.
Key Takeaway
The regional banking sector is clearly facing some strong headwinds. By using our tools, you can quickly move from a high-level sector overview to a deep dive into individual ETFs and their underlying holdings to understand the dynamics at play.
That’s it for this category spotlight. If you have any questions, as always, please reach out to the team at ETF Action.
Thanks for watching, and have a great weekend.
Disclosures
This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.
This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.
