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Regional Banking ETF Hits New All-Time Highs

Wednesday, January 4, 2017 8:49
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From Zacks: For investors seeking momentum, SPDR S&P Regional Banking ETF (KREFree Report) is probably on radar now. The fund just hit a 52-week high, and is up about 70.3% from its 52-week low price of $32.63/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

This ETF seeks to provide exposure to the publicly traded companies that do business as regional banks or thrifts. Holding 101 securities in its basket, the fund is widely spread out across components with none holding more than 3.64%. The fund charges investors 35 basis points a year in fees (see: all the Financial ETFs here).

Why the Move?

The banking corner of the financial space has been an area to watch lately given that is backed by the dual tailwind of the Trump policy and the rising rates. Trump seeks to deregulate the industry and dismantle the Dodd-Frank Act, which was enacted in the aftermath of the financial crisis and crimped some of the business lines of banks. A rising interest rate scenario would be highly profitable for banks because these seek to borrow money at short-term rates and lend at long-term rates. As a result, banks are the major beneficiaries and expected to outperform the other sectors in the coming months.

More Gains Ahead?

Currently, KRE has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a High risk outlook, suggesting that the outperformance could continue in the months ahead. Further, many of the segments that make up this ETF have a strong Zacks Industry Rank, so there is definitely still some promise for those who want to ride on this surging ETF a little longer.

The SPDR KBW Regional Banking ETF (NYSE:KRE) was trading at $56.01 per share on Wednesday morning, up $0.44 (+0.79%). Over the past year, KRE has gained 34.91%, versus a 12.03% rise in the benchmark S&P 500 index during the same period.

KRE currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #3 of 38 ETFs in the Financial Equities ETFs category.

This article is brought to you courtesy of Zacks Research.

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