{"id":3531,"date":"2025-08-27T18:07:53","date_gmt":"2025-08-27T18:07:53","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=3531"},"modified":"2025-08-28T02:44:06","modified_gmt":"2025-08-28T02:44:06","slug":"pinpointing-targets-in-the-financial-sector","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/pinpointing-targets-in-the-financial-sector\/","title":{"rendered":"Pinpointing Targets in the Financial Sector"},"content":{"rendered":"

The Finance Sector is ranked as #3 among the 15 we cover for year-ahead returns by the ValuEngine forecast model.\u00a0 Finance sector stocks and ETFs along with the previously profiled utilities sector are generally perceived as stodgy stocks that are most commonly bought by older investors for dividend yield.\u00a0 However, that has not been true of either sector recently.\u00a0 The natures of both sectors, finance and utilities, have changed as a result of new technological advancements.\u00a0 The innovations that have affected the financial sector have been more subtle but no less substantial.<\/span><\/p>\n

Financial Advisory Services based on ValuEngine\u2019s research models: www.ValuEngineCapital.com<\/a><\/h6>\n

This table compares the 11 Select Sector SPDR ETFs.\u00a0 These are among the tools most frequently used by sector rotators, asset allocators and hedge funds to take positions in a specific sector of the economy.\u00a0\u00a0<\/span><\/p>\n

All 4,200+ stock and 700+ ETF reports are updated daily.\u00a0 Theycan be viewed HERE<\/a><\/h6>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Ticker<\/b><\/td>\nETF Name<\/b><\/td>\nVE Rating<\/b><\/td>\nAssets ($B)<\/b><\/td>\nYTD Price Change<\/b><\/td>\n1 Year<\/b><\/td>\n5 Year<\/b><\/td>\nAnnual Dividend Yield %<\/b><\/td>\nP\/E Ratio<\/b><\/td>\n<\/tr>\n
XLF<\/span><\/td>\nFinancial Select Sector SPDR Fund<\/span><\/td>\n5<\/span><\/td>\n$51.5\u00a0<\/span><\/td>\n9.60%<\/span><\/td>\n21.31%<\/span><\/td>\n18.54%<\/span><\/td>\n1.4%<\/span><\/td>\n12.5<\/span><\/td>\n<\/tr>\n
XLC<\/span><\/td>\nCommunication Services Select Sector SPDR Fund<\/span><\/td>\n5<\/span><\/td>\n$25.1\u00a0<\/span><\/td>\n14.42%<\/span><\/td>\n27.69%<\/span><\/td>\n13.81%<\/span><\/td>\n1.0%<\/span><\/td>\n16.0<\/span><\/td>\n<\/tr>\n
XLY<\/span><\/td>\nConsumer Discretionary Select Sector SPDR Fund<\/span><\/td>\n5<\/span><\/td>\n$22.9\u00a0<\/span><\/td>\n2.95%<\/span><\/td>\n25.09%<\/span><\/td>\n10.34%<\/span><\/td>\n0.8%<\/span><\/td>\n24.2<\/span><\/td>\n<\/tr>\n
XLI<\/span><\/td>\nIndustrial Select Sector SPDR Fund<\/span><\/td>\n4<\/span><\/td>\n$23.2\u00a0<\/span><\/td>\n15.58%<\/span><\/td>\n20.20%<\/span><\/td>\n16.32%<\/span><\/td>\n1.3%<\/span><\/td>\n18.5<\/span><\/td>\n<\/tr>\n
XLK<\/span><\/td>\nTechnology Select Sector SPDR Fund<\/span><\/td>\n3<\/span><\/td>\n$85.0\u00a0<\/span><\/td>\n12.90%<\/span><\/td>\n17.05%<\/span><\/td>\n18.82%<\/span><\/td>\n0.6%<\/span><\/td>\n23.8<\/span><\/td>\n<\/tr>\n
XLV<\/span><\/td>\nHealth Care Select Sector SPDR Fund<\/span><\/td>\n3<\/span><\/td>\n$33.0\u00a0<\/span><\/td>\n0.27%<\/span><\/td>\n-9.57%<\/span><\/td>\n6.63%<\/span><\/td>\n1.8%<\/span><\/td>\n16.7<\/span><\/td>\n<\/tr>\n
XLU<\/span><\/td>\nUtilities Select Sector SPDR Fund<\/span><\/td>\n3<\/span><\/td>\n$21.3\u00a0<\/span><\/td>\n15.33%<\/span><\/td>\n18.26%<\/span><\/td>\n10.86%<\/span><\/td>\n2.7%<\/span><\/td>\n17.9<\/span><\/td>\n<\/tr>\n
XLP<\/span><\/td>\nConsumer Staples Select Sector SPDR Fund<\/span><\/td>\n2<\/span><\/td>\n$16.5\u00a0<\/span><\/td>\n6.55%<\/span><\/td>\n5.03%<\/span><\/td>\n7.80%<\/span><\/td>\n2.4%<\/span><\/td>\n19.9<\/span><\/td>\n<\/tr>\n
XLE<\/span><\/td>\nEnergy Select Sector SPDR Fund<\/span><\/td>\n1<\/span><\/td>\n$26.1\u00a0<\/span><\/td>\n0.91%<\/span><\/td>\n-3.51%<\/span><\/td>\n22.65%<\/span><\/td>\n3.4%<\/span><\/td>\n8.9<\/span><\/td>\n<\/tr>\n
XLRE<\/span><\/td>\nReal Estate Select Sector SPDR Fund<\/span><\/td>\n1<\/span><\/td>\n$7.4\u00a0<\/span><\/td>\n4.04%<\/span><\/td>\n2.28%<\/span><\/td>\n6.41%<\/span><\/td>\n3.3%<\/span><\/td>\n33.7<\/span><\/td>\n<\/tr>\n
XLB<\/span><\/td>\nMaterials Select Sector SPDR Fund<\/span><\/td>\n1<\/span><\/td>\n$5.3\u00a0<\/span><\/td>\n8.08%<\/span><\/td>\n0.90%<\/span><\/td>\n9.68%<\/span><\/td>\n1.9%<\/span><\/td>\n16.1<\/span><\/td>\n<\/tr>\n
SPLG<\/span><\/td>\nSPDR Portfolio S&P 500 ETF<\/span><\/td>\n3<\/span><\/td>\n$82.1\u00a0<\/span><\/td>\n9.86%<\/span><\/td>\n15.83%<\/span><\/td>\n15.28%<\/span><\/td>\n1.2%<\/span><\/td>\n17.9<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Current ValuEngine reports on all covered stocks and ETFS can be viewed HERE<\/a><\/h6>\n

Unsurprisingly, in view of the relentless bull market leadership of technology stocks, the Technology Select Sector SPDR (<\/span>XLK<\/span><\/a>) is the largest of the group if ranked by assets under management.\u00a0 Performance would be one reason.\u00a0 <\/span>XLK<\/span><\/a> has outperformed S&P 500 Index ETFs, represented here by <\/span>SPLG<\/span><\/a>, in all three time periods in this table:\u00a0 year-to-date, 1-year and 5 years.\u00a0 That said, with a VE Rating of 3 (Hold), we expected it to be performing closer to in line with the market during the next one-to-12 months.\u00a0 Two of its top stocks, Nvidia (<\/span>NVDA<\/span><\/a>) and Apple (<\/span>AAPL<\/span><\/a>) are now also ranked 3 (Hold).\u00a0\u00a0<\/span><\/p>\n

On the other hand, two other Select Sector SPDRs with their largest market cap companies also members of the \u201cMagnificent Seven\u201d are still rated 5 (Strong Buy). Communications Services (<\/span>XLC<\/span><\/a>) is bolstered by Google (<\/span>GOOGL<\/span><\/a>) and Netflix (<\/span>NFLX<\/span><\/a>) even though <\/span>META<\/span><\/a>\u00a0 was recently downgraded from 5 to 3.\u00a0 Consumer Discretionary is led by Amazon (<\/span>AMZN<\/span><\/a>), still rated 5 and Tesla (<\/span>TSLA<\/span><\/a>) rated 4 in addition to three other Buy or Strong Buy rated stocks among its top 10.\u00a0 Looking at historical performance, neither <\/span>XLC<\/span><\/a> nor <\/span>XLY<\/span><\/a> outperformed <\/span>SPLG<\/span><\/a> (the S&P 500 Index ETF from SSgA) for the past 5-year period.\u00a0 XLY<\/a> has also significantly underperformed SPLG on a year-to-date basis.\u00a0\u00a0<\/span><\/p>\n

The only Select Sector SPDR that both outperformed in all three time frames and also gets our top rating of 5 for forecasted relative performance is <\/span>XLF<\/span><\/a>, which represents the Finance sector. It surprised me and may be somewhat surprising to you that <\/span>XLF<\/span><\/a> is the second largest of the Select Sector SPDR ETFs in total assets, and by a wide margin.\u00a0 With nearly $52 billion, it has more than double the amount of assets in <\/span>XLC<\/span><\/a>. Using a valuation lens, <\/span>XLF<\/span><\/a> has a higher dividend yield than <\/span>XLC<\/span><\/a>, <\/span>XLK<\/span><\/a>, <\/span>XLY<\/span><\/a> and <\/span>SPLG<\/span><\/a> while being priced at a significantly lower P\/E ratio than any of these four.\u00a0\u00a0<\/span><\/p>\n

Eight of the top 10 holdings in <\/span>XLF<\/span><\/a> are rated 4 (Buy) or 5 (Strong buy).\u00a0 The strong-buy stocks are Citigroup (<\/span>C<\/span><\/a> ) and Wells Fargo (<\/span>WFC<\/span><\/a>).\u00a0 The buy-rated stocks are JP Morgan Chase (<\/span>JPM<\/span><\/a>), Visa (<\/span>VSA<\/span><\/a>), MasterCard (<\/span>MC<\/span><\/a>), Bank of America (<\/span>BAC<\/span><\/a>), Goldman Sachs (<\/span>GS<\/span><\/a>) and Morgan Stanley (<\/span>MS<\/span><\/a>).\u00a0 All are US banks or brokerage firms.\u00a0\u00a0<\/span><\/p>\n

In all, 20 financial sector stocks we cover are rated 5 (Strong Buy) in forecasted performance.\u00a0 This table shows all 20.\u00a0 Since they are all top-rated, we ranked this list by our valuation model ranking instead.\u00a0 We also highlighted the four exceptions to a glaringly obvious trend in the names of the companies on the list.<\/span><\/p>\n

Current ValuEngine reports on all covered stocks and ETFS can be viewed HERE<\/a><\/h6>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Ticker<\/b><\/td>\nCompany Name<\/b><\/td>\nRating<\/b><\/td>\nValu Rank<\/b><\/td>\nE\/P Ratio<\/b><\/td>\nP\/E<\/b><\/td>\n12-Mo Gain<\/b><\/td>\nMkt Cap<\/b><\/td>\nPEG<\/b><\/td>\nDiv Yld<\/b><\/td>\n<\/tr>\n
UBS<\/span><\/td>\nUBS GROUP AG<\/span><\/td>\n5<\/span><\/td>\n77<\/span><\/td>\n0.05<\/span><\/td>\n20.0<\/span><\/td>\n32%<\/span><\/td>\n128<\/span><\/td>\n0.3<\/span><\/td>\n0.6%<\/span><\/td>\n<\/tr>\n
ITUB<\/span><\/td>\nBANCO ITAU -ADR<\/span><\/td>\n5<\/span><\/td>\n75<\/span><\/td>\n0.1<\/span><\/td>\n10.0<\/span><\/td>\n13%<\/span><\/td>\n75<\/span><\/td>\n1.6<\/span><\/td>\n3.4%<\/span><\/td>\n<\/tr>\n
TRV<\/span><\/td>\nTRAVELERS COS<\/span><\/td>\n5<\/span><\/td>\n66<\/span><\/td>\n0.09<\/span><\/td>\n11.1<\/span><\/td>\n23%<\/span><\/td>\n60<\/span><\/td>\n1.5<\/span><\/td>\n1.7%<\/span><\/td>\n<\/tr>\n
CRARY<\/span><\/td>\nCREDIT AGRICOLE<\/span><\/td>\n5<\/span><\/td>\n47<\/span><\/td>\n0.13<\/span><\/td>\n7.7<\/span><\/td>\n36%<\/span><\/td>\n60<\/span><\/td>\n2.4<\/span><\/td>\n4.0%<\/span><\/td>\n<\/tr>\n
BK<\/span><\/td>\nBANK OF NY MELL<\/span><\/td>\n5<\/span><\/td>\n42<\/span><\/td>\n0.07<\/span><\/td>\n14.3<\/span><\/td>\n55%<\/span><\/td>\n71<\/span><\/td>\n1.7<\/span><\/td>\n2.1%<\/span><\/td>\n<\/tr>\n
BNPQY<\/span><\/td>\nBNP PARIBAS-ADR<\/span><\/td>\n5<\/span><\/td>\n36<\/span><\/td>\n0.11<\/span><\/td>\n9.1<\/span><\/td>\n47%<\/span><\/td>\n111<\/span><\/td>\n0.4<\/span><\/td>\n4.1%<\/span><\/td>\n<\/tr>\n
WFC<\/span><\/td>\nWELLS FARGO-NEW<\/span><\/td>\n5<\/span><\/td>\n33<\/span><\/td>\n0.07<\/span><\/td>\n14.3<\/span><\/td>\n41%<\/span><\/td>\n247<\/span><\/td>\n1.5<\/span><\/td>\n2.3%<\/span><\/td>\n<\/tr>\n
SCHW<\/span><\/td>\nSCHWAB(CHAS)<\/span><\/td>\n5<\/span><\/td>\n32<\/span><\/td>\n0.04<\/span><\/td>\n25.0<\/span><\/td>\n47%<\/span><\/td>\n175<\/span><\/td>\n1.0<\/span><\/td>\n1.1%<\/span><\/td>\n<\/tr>\n
MUFG<\/span><\/td>\nMITSUBISHI-UFJ<\/span><\/td>\n5<\/span><\/td>\n30<\/span><\/td>\n0.07<\/span><\/td>\n14.3<\/span><\/td>\n53%<\/span><\/td>\n192<\/span><\/td>\n1.4<\/span><\/td>\n2.7%<\/span><\/td>\n<\/tr>\n
ALIZY<\/span><\/td>\nALLIANZ SE-ADR<\/span><\/td>\n5<\/span><\/td>\n28<\/span><\/td>\n0.07<\/span><\/td>\n14.3<\/span><\/td>\n53%<\/span><\/td>\n170<\/span><\/td>\n0.8<\/span><\/td>\n2.7%<\/span><\/td>\n<\/tr>\n
NWG<\/span><\/td>\nNATWEST GROUP<\/span><\/td>\n5<\/span><\/td>\n28<\/span><\/td>\n0.1<\/span><\/td>\n10.0<\/span><\/td>\n64%<\/span><\/td>\n60<\/span><\/td>\n0.7<\/span><\/td>\n3.4%<\/span><\/td>\n<\/tr>\n
NRDBY<\/span><\/td>\nNORDEA BANK ABP<\/span><\/td>\n5<\/span><\/td>\n28<\/span><\/td>\n0.09<\/span><\/td>\n11.1<\/span><\/td>\n42%<\/span><\/td>\n56<\/span><\/td>\n0.8<\/span><\/td>\n2.9%<\/span><\/td>\n<\/tr>\n
ING<\/span><\/td>\nING GROEP-ADR<\/span><\/td>\n5<\/span><\/td>\n26<\/span><\/td>\n0.09<\/span><\/td>\n11.1<\/span><\/td>\n44%<\/span><\/td>\n78<\/span><\/td>\n0.4<\/span><\/td>\n2.8%<\/span><\/td>\n<\/tr>\n
BCS<\/span><\/td>\nBARCLAY PLC-ADR<\/span><\/td>\n5<\/span><\/td>\n22<\/span><\/td>\n0.11<\/span><\/td>\n9.1<\/span><\/td>\n71%<\/span><\/td>\n72<\/span><\/td>\n0.6<\/span><\/td>\n1.5%<\/span><\/td>\n<\/tr>\n
C<\/span><\/td>\nCITIGROUP INC<\/span><\/td>\n5<\/span><\/td>\n22<\/span><\/td>\n0.07<\/span><\/td>\n14.3<\/span><\/td>\n55%<\/span><\/td>\n172<\/span><\/td>\n0.6<\/span><\/td>\n2.6%<\/span><\/td>\n<\/tr>\n
SCGLY<\/span><\/td>\nSOCIETE GENL FR<\/span><\/td>\n5<\/span><\/td>\n21<\/span><\/td>\n0.09<\/span><\/td>\n11.1<\/span><\/td>\n199%<\/span><\/td>\n54<\/span><\/td>\n0.3<\/span><\/td>\n1.2%<\/span><\/td>\n<\/tr>\n
HSBC<\/span><\/td>\nHSBC HOLDINGS<\/span><\/td>\n5<\/span><\/td>\n20<\/span><\/td>\n0.11<\/span><\/td>\n9.1<\/span><\/td>\n49%<\/span><\/td>\n223<\/span><\/td>\nn\/a<\/span><\/td>\n3.1%<\/span><\/td>\n<\/tr>\n
BBVA<\/span><\/td>\nBANCO BILBAO VZ<\/span><\/td>\n5<\/span><\/td>\n14<\/span><\/td>\n0.1<\/span><\/td>\n10.0<\/span><\/td>\n91%<\/span><\/td>\n112<\/span><\/td>\n7.7<\/span><\/td>\n3.8%<\/span><\/td>\n<\/tr>\n
DB<\/span><\/td>\nDEUTSCHE BK AG<\/span><\/td>\n5<\/span><\/td>\n12<\/span><\/td>\n0.07<\/span><\/td>\n14.3<\/span><\/td>\n141%<\/span><\/td>\n73<\/span><\/td>\n0.4<\/span><\/td>\n0.6%<\/span><\/td>\n<\/tr>\n
SAN<\/span><\/td>\nBANCO SANTAN SA<\/span><\/td>\n5<\/span><\/td>\n9<\/span><\/td>\n0.09<\/span><\/td>\n11.1<\/span><\/td>\n108%<\/span><\/td>\n143<\/span><\/td>\n0.6<\/span><\/td>\n1.9%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Current ValuEngine reports on all covered stocks and ETFS can be viewed HERE<\/a><\/h6>\n

Please note that the four highlighted companies are the only US domiciled companies on the list.\u00a0 All of the others are stocks foreign-domiciled financial institutions.\u00a0 Furthermore, only 3 stocks are in the top 40% of our valuation model\u2019s rank.\u00a0 The other 17 on the list are classified as between somewhat overvalued to very overvalued.\u00a0 One thing to take into account is that our valuation model is much more sensitive to the current price with the investor paying for projected future price gains than it is to the historical and often-backward looking ratios commonly favored by\u00a0 many value investors. Accordingly, there tends to be more of a correlation of our value rank to the PEG (Price-to-Earnings Growth) ratio than to Price\/Earnings multiples.\u00a0\u00a0<\/span><\/p>\n

We\u2019ve noted a few times since midyear that the pronounced fall of the value of the dollar relative to the euro has resulted in US-listed American Depository Receipts (ADRs) performing much better during the first half of this year than equivalently sized US companies in the same global industry group.\u00a0 Although the four US-domiciled companies\u2019 stocks performed very well, the top seven 12-month performers were all ADRs of foreign banks.\u00a0 Since the table is ordered with the most undervalued stocks on top, it should not be a surprise that most of the largest gainers in the past 12 months now rank near the bottom of the list for valuation.\u00a0 Nonetheless, our predictive model still predicts all twenty to be well-above average performers in the next 1-to-12 month period.\u00a0 As a bonus, investors in the foreign-domiciled ADRs during the past 12 months also enjoyed a far superior dividend yield.\u00a0<\/span><\/p>\n

Although the US-Listed ETF we focused on thus far has been Finance Select Sector <\/span>XLF<\/span><\/a>, ETFdb.com, our comprehensive source for ETF data from VettaFI, has 48 non-leveraged ETFs that cover the sector.\u00a0 10 of them are leveraged or inverse which leaves 38 various ways to slice and dice the sector.\u00a0 This includes ETFs that isolate different industries within the sector such as banking, insurance and capital markets.\u00a0 Other ETFs hold portfolios of the sector globally or in just one region such as Europe, Asia, Emerging Markets or China.\u00a0 Some also focus on so-called \u201csmart beta\u201d factors such as high-yield and small market capitalization.\u00a0 Here is a snapshot of the top ten performing non-leveraged ones during the past 12 months excluding ETFs not available for all five years.<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Ticker\u00a0<\/b><\/td>\nETF Name<\/b><\/td>\nAssets ($Mil.)<\/b><\/td>\n1 Year Returns<\/b><\/td>\n5 Year Returns<\/b><\/td>\nExp.<\/b><\/p>\n

Ratio<\/b><\/td>\n

 Annual Dividend Yield %<\/b><\/td>\n<\/tr>\n
EUFN<\/span><\/td>\niShares MSCI Europe Financials ETF<\/span><\/td>\n$4,453\u00a0<\/span><\/td>\n53.95%<\/span><\/td>\n22.94%<\/span><\/td>\n0.48%<\/span><\/td>\n3.75%<\/span><\/td>\n<\/tr>\n
IAI<\/span><\/td>\niShares U.S. Broker-Dealers & Securities Exchanges ETF<\/span><\/td>\n$1,446\u00a0<\/span><\/td>\n40.98%<\/span><\/td>\n24.28%<\/span><\/td>\n0.38%<\/span><\/td>\n0.93%<\/span><\/td>\n<\/tr>\n
KBWB<\/span><\/td>\nInvesco KBW Bank ETF<\/span><\/td>\n$4,647\u00a0<\/span><\/td>\n33.29%<\/span><\/td>\n16.47%<\/span><\/td>\n0.35%<\/span><\/td>\n2.17%<\/span><\/td>\n<\/tr>\n
KCE<\/span><\/td>\nSPDR S&P Capital Markets ETF<\/span><\/td>\n$582\u00a0<\/span><\/td>\n32.26%<\/span><\/td>\n23.28%<\/span><\/td>\n0.35%<\/span><\/td>\n1.48%<\/span><\/td>\n<\/tr>\n
IXG<\/span><\/td>\niShares Global Financials ETF<\/span><\/td>\n$570\u00a0<\/span><\/td>\n29.66%<\/span><\/td>\n18.49%<\/span><\/td>\n0.41%<\/span><\/td>\n2.22%<\/span><\/td>\n<\/tr>\n
IYG<\/span><\/td>\niShares U.S. Financial Services ETF<\/span><\/td>\n$1,875\u00a0<\/span><\/td>\n28.20%<\/span><\/td>\n17.52%<\/span><\/td>\n0.39%<\/span><\/td>\n1.07%<\/span><\/td>\n<\/tr>\n
DFNL<\/span><\/td>\nDavis Select Financial ETF<\/span><\/td>\n$297\u00a0<\/span><\/td>\n26.69%<\/span><\/td>\n19.82%<\/span><\/td>\n0.63%<\/span><\/td>\n1.90%<\/span><\/td>\n<\/tr>\n
FINX<\/span><\/td>\nGlobal X FinTech ETF<\/span><\/td>\n$297\u00a0<\/span><\/td>\n26.39%<\/span><\/td>\n-0.77%<\/span><\/td>\n0.68%<\/span><\/td>\n0.50%<\/span><\/td>\n<\/tr>\n
IYF<\/span><\/td>\niShares U.S. Financials ETF<\/span><\/td>\n$3,964\u00a0<\/span><\/td>\n23.74%<\/span><\/td>\n17.82%<\/span><\/td>\n0.39%<\/span><\/td>\n1.28%<\/span><\/td>\n<\/tr>\n
FNCL<\/span><\/td>\nFidelity MSCI Financials Index ETF<\/span><\/td>\n$2,302\u00a0<\/span><\/td>\n23.26%<\/span><\/td>\n18.52%<\/span><\/td>\n0.08%<\/span><\/td>\n1.49%<\/span><\/td>\n<\/tr>\n
VFH<\/span><\/td>\nVanguard Financials ETF<\/span><\/td>\n$12,608\u00a0<\/span><\/td>\n23.25%<\/span><\/td>\n18.62%<\/span><\/td>\n0.09%<\/span><\/td>\n1.71%<\/span><\/td>\n<\/tr>\n
FTXO<\/span><\/td>\nFirst Trust Nasdaq Bank ETF<\/span><\/td>\n$230\u00a0<\/span><\/td>\n22.65%<\/span><\/td>\n16.16%<\/span><\/td>\n0.60%<\/span><\/td>\n2.04%<\/span><\/td>\n<\/tr>\n
XLF<\/span><\/td>\nFinancial Select Sector SPDR Fund<\/span><\/td>\n$51,905\u00a0<\/span><\/td>\n21.74%<\/span><\/td>\n18.34%<\/span><\/td>\n0.08%<\/span><\/td>\n1.38%<\/span><\/td>\n<\/tr>\n
FXO<\/span><\/td>\nFirst Trust Financials AlphaDEX Fund<\/span><\/td>\n$2,190\u00a0<\/span><\/td>\n18.87%<\/span><\/td>\n19.42%<\/span><\/td>\n0.62%<\/span><\/td>\n1.93%<\/span><\/td>\n<\/tr>\n
RSPF<\/span><\/td>\nInvesco S&P 500 Equal Weight Financials ETF<\/span><\/td>\n$322\u00a0<\/span><\/td>\n17.75%<\/span><\/td>\n16.24%<\/span><\/td>\n0.40%<\/span><\/td>\n1.19%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Current ValuEngine reports on all covered stocks and ETFS can be viewed HERE<\/a><\/h6>\n

The ETF that defines the Financial Sector for many traders, <\/span>XLF<\/span><\/a>, placed 13<\/span>th<\/span> in 1-year price gain.\u00a0 Given our earlier analysis concerning foreign-domiciled large banks, particularly in Europe, it makes sense that the iShares MSCI Europe Financials ETF (<\/span>EUFN<\/span><\/a>) had the highest gain by a wide margin, nearly 54% or about 2.5 times the robust 21.7% gained by <\/span>XLF<\/span><\/a>.\u00a0 That said, a US-only ETF, iShares U.S. Broker-Dealers & Securities Exchanges ETF, <\/span>IAI<\/span><\/a>, placed second with a 41% price gain. <\/span>IAI<\/span><\/a> posted at the top for the entire five-year period. <\/span>EUFN<\/span><\/a> also boasts the highest current dividend yield in this selection, about 3.8%.\u00a0 The third place finisher targeted only banks. It is the Invesco KBW bank ETF, <\/span>KBWB<\/span><\/a>, with a 33.3% twelve-month price gain and a yield of 2.2%. Our forecast model expects <\/span>IAI<\/span><\/a> and <\/span>KBWB<\/span><\/a> to continue their strong relative performance going forward.\u00a0 Both are rated 5 (Strong Buy). Size is not too much of an issue for most sizes of transactions. <\/span>KBWB<\/span><\/a> and <\/span>EUFN<\/span><\/a> also place third and fourth in total assets respectively with $4.6 billion and $4.5 billion.\u00a0<\/span><\/p>\n

Both, however, are much smaller than the $52 billion in <\/span>XLF<\/span><\/a> and the $12 billion in Vanguard Financials ETF, <\/span>VFH<\/span><\/a>.\u00a0 The last finished 11<\/span>th<\/span> overall in price gain. Veteran ETF users will not be surprised to see that the expense ratios for these specialty-segment-targeted ETFs are considerably higher than ETFs designed to reflect the entire sector.\u00a0 In fact, there is a huge spread in expense ratios between the three least expensive, <\/span>XLF<\/span><\/a>, <\/span>VFH<\/span><\/a> and <\/span>FNCL<\/span><\/a> from Fidelity, all at just 8 basis points.\u00a0 <\/span>KBWB<\/span><\/a>, an indexed ETF designed by research firm KBW\u2019s analysts, is at the low-end of the higher-expense-ratio ETFs at 0.35%.\u00a0 It would normally be expected given foreign custody and analytic data costs that ETFs holding foreign-listed stocks would charge a higher expense ratio.\u00a0 This helps explain why the expense ratio of <\/span>EUFN<\/span><\/a> is even higher at 0.48%.\u00a0 <\/span>EUFN<\/span><\/a> still charges less than actively managed <\/span>DFNL<\/span><\/a> and Global X Fintech ETF <\/span>FINX<\/span><\/a> with expense ratios above 0.60%.\u00a0\u00a0<\/span><\/p>\n

Financial Advisory Services based on ValuEngine\u2019s research models: www.ValuEngineCapital.com<\/a><\/h5>\n

Conclusion<\/strong><\/p>\n

ValuEngine\u2019s forecast model is very bullish on the Financial sector, its ETFs and an above-average percentage of the stocks we cover.\u00a0 That said, many of the individual stocks and the ETFs that hold them are overvalued according to our valuation model, although not as overvalued as other sectors such as Technology and Consumer Durables.\u00a0 This means that while many of these stocks and ETFs are currently overvalued by ValuEngine, the complex models indicate that they will continue to rise in price further and there is more room for stock or ETF price increases. But the risk is higher than it was last year. The fact that the dividend yields are more generous than those of the major indexes and most other sectors add to the relative attractiveness of the sector.<\/span><\/p>\n

_____________________________________________________________________<\/span><\/p>\n

B<\/b>y Herbert Blank<\/h5>\n
Senior Quantitative Analyst, ValuEngine Inc ( www.ValuEngine.com<\/a> )<\/h5>\n
support@ValuEngine.com\u00a0 \u00a0 \u00a0 \u00a0 \u00a0(321) 325-0519<\/h5>\n
All of the over 4,200 stocks, 15 sector groups, over 250 industries, and 700 ETFs have been updated on www.ValuEngine.com<\/a><\/h5>\n
Financial Advisory Services based on ValuEngine research available through ValuEngine Capital Management, LLC<\/a><\/h5>\n
FREE Two-Week Trial to all 6,000 plus equities and ETFs covered by ValuEngine HERE<\/a><\/h5>\n
Subscribers log in HERE<\/a><\/h5>\n","protected":false},"excerpt":{"rendered":"

The Finance Sector is ranked as #3 among the 15 we cover for year-ahead returns by the ValuEngine forecast model.\u00a0 Finance sector stocks and ETFs along with the previously profiled utilities sector are generally perceived as stodgy stocks that are most commonly bought by older investors for dividend yield.\u00a0 However, that has not been true … Read more<\/a><\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[130,1,39],"tags":[2666,2645,2673,2670,2662,538,2671,2661,2674,1760,1761,2656,1855,2644,1731,2672,2669,2659,2643,2665,2657,2668,2667,1510,2111,1911,1938,2675,539,2664,1699,2655,1644,2660,2506,2658,1659,2663],"_links":{"self":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/3531"}],"collection":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/comments?post=3531"}],"version-history":[{"count":8,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/3531\/revisions"}],"predecessor-version":[{"id":3539,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/posts\/3531\/revisions\/3539"}],"wp:attachment":[{"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/media?parent=3531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/categories?post=3531"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.valuengine.com\/index.php\/wp-json\/wp\/v2\/tags?post=3531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}