The Goldman Sachs Effect: Are Financial ETFs Set for a Near-Term Boost?

 |  Includes: GS, IAI, IYG, KCE, VFH, XLF
by: Gary Gordon

Talk about clearing the air. On Thursday, 7/15, the Senate passed a financial regulatory bill for President Obama to sign next week. What’s more, the SEC agreed to settlement terms with Goldman Sachs.

How might this play out for ETF investors? The worry about what FINREG will or won’t contain is gone. What’s more, analysts can now put pencil to paper on how bad (how good) the SEC settlement is for Goldman’s business model.

The early line is that Goldman will benefit handsomely from paying the $550 million toll. Specifically, after-hours shares of GS jumped 5% on the news.

Assuming the 5% move in GS holds… and assuming other financial services firms get an innocent-by-association industry lift… you might want to keep an eye on these ETFs:

Financial ETFs With a Heavy Goldman Sachs Weighting
% GS Weighting
iShares Broker-Dealers (NYSEARCA:IAI) 9.4%
KBW Capital Markets (NYSEARCA:KCE) 7.3%
iShares DJ Financial Services (NYSEARCA:IYG) 4.7%
SPDR Select Financials (NYSEARCA:XLF) 4.4%
Vanguard Financials (NYSEARCA:VFH)
Click to enlarge

Disclosure Statement: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company receives advertising compensation at the ETF Expert web site from Invesco PowerShares Capital Management, LLC. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.