Not All Financial ETFs Are Struggling

One year ago, the Fed raised interest rates for the last time. Many believed that with the Fed holding its overnight lending rate to 5.25%, Financials would assume a leadership role.

Of course, things rarely happen according to schedule, plan or prediction. The Fed has maintained a slight bias towards hiking interest rates. The lending industry has been battered by substandard practices in the "subprime" space. And investors have shunned the sector.

Through the first 6 months of June, Financials represented the only major sector of the U.S. economy to lose ground. In fact, the S&P SDPR Financials Index (XLF) returned a dismal -1.12%.

Still, before one sends the rate-sensitive segment to an early grave, one might want to see if a positive trend might be forming. If one digs into companies with significantly less lending exposure, one finds that "Insurance ETFs" have performed rather nicely. Both KBW Insurance ETF (KIE) and the PowerShares Dynamic Insurance (PIC) have proffered respectable gains near 5%.

International financial stocks have also had a relatively solid run. The WisdomTree International Financial Sector Fund (DRF) has weathered threats from global inflation to rising rates worldwide... and still served up a handsome year-to-date gain of 6.5%. (When you consider the fact that the expected 4% annual dividend has yet to play a part in any distribution, DRF doesn't look too shabby.)

Disclosure: As a Registered Investment Advisor, Pacific Park Financial, Inc. may hold positions in the ETFs, mutual funds and/or index funds mentioned above.