ETF Spotlight on SPDR KBW Regional Banking (KRE), part of an ongoing series on individual exchange traded funds.
Assets: $410.12 million.
Objective: SPDR KBW Regional Banking ETF tries to reflect the performance of the KBW Regional Banking Index, which is an equal-weighted index that holds publicly traded companies that do business as regional banks or thrifts.
Holdings: Top holdings include: Community Bk Sys Inc (CBU) 3.26%, Cvb Final Corp (CVBF) 2.62%, Wintrust Financial Corp (WTFC) 2.80%, Boston Private Finl Hldgs (BPFH) 2.69% and Signature Bk New York (SBNY) 2.62%.
What You Should Know:
- State Street Global Advisors is the fund provider of KBE.
- KBE has an expense ratio of 0.35%.
- The fund is down 14.14% over the last month, 14.42% the past three months and 19.07% year-to-date.
- Sector allocations include: Regional Banks 95.11% and Thrifts & Mortgages 4.89%.
- “The banks included in KRE’s portfolio exhibit more of the characteristics we’d expect from traditional regional banks – conservative loan books, considerably less leverage, and business models centered around gathering local deposits,” according to Timothy Strauts, Morningstar analyst.
- Those who feel the banking sector is still in for some painful times may consider the inverse option: Short KBW Regional Banking (KRS).
The Latest News:
- The Federal Housing Finance Agency is set to file lawsuits against more than a dozen big banks over their roles in packaging and marketing toxic mortgage securities, The New York Times reports.
- The recent bounce in the financial sector and Warren Buffett’s $5 billion bet on Bank of America (BAC) have triggered speculation that banking ETFs have finally hit bottom and are due for a turn.
- Lackluster economic data sent financials falling ahead of the broader S&P on Thursday, according to BusinessWeek.
- Regional banking executives expect weaker projections from the government but they see a double-dip recession, according to Sterne, Agee analysts Todd Hagerman and Robert Greene.
- The sector is contending with new regulations and higher capital requirements while cutting jobs.
- “While we remain encouraged by the progress management is making both in terms of underlying credit quality and efficiency initiatives, our sense is that upside in the shares … is challenged given the limited growth opportunities, weak core profitability, and lack of capital flexibility, particularly for 2011,” commented the two analysts.
SPDR KBW Regional Banking
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Max Chen contributed to this article.