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Yahoo
26-04-2025
- Business
- Yahoo
Best financial ETFs: Top funds for banks, insurers and REITs
If you're wondering how to invest in the financial sector, exchange-traded funds (ETFs) can be a simple way to get started. ETFs that focus on the financial sector invest in companies that are involved in different areas of finance such as banking, insurance, real estate and investment management. You can choose a broad financial ETF that invests in all these areas, or you can choose to invest more narrowly in one of the sub-sectors. By using an ETF, you can invest in a basket of companies without having too much exposure to one individual stock. Here are some of the best financial ETFs investors should consider. All data is as of April 23, 2025. Though the financial sector may seem homogenous, several different businesses fall within the financial label. You can invest in a broad financial ETF or choose to focus on one of its type of fund will hold companies in all areas of the financial sector and will typically be the most diversified type of fund will hold a number of different banks, with major banks such as J.P. Morgan Chase and Bank of America typically making up significant percentages of the fund's type of fund will hold companies that provide different types of insurance such as auto, life and property and type of fund invests in companies involved in capital market activities such as asset management, brokers and type of fund may hold real estate investment trusts (REITs) or other companies involved in the purchase or development of real property such as hotels or office buildings. This fund seeks to achieve investment performance that tracks the Financial Select Sector Index, which aims to provide an effective representation of the financial sector of the S&P 500. The ETF holds companies involved in a variety of financial activities including banking, insurance, REITs and capital markets. 5-year returns (annualized): 19.6 percent Expense ratio: 0.08 percent Dividend yield: 1.4 percent This ETF invests based on the KBW Nasdaq Bank Index and typically allocates at least 90 percent of its assets in securities that make up the index. Holdings include large money-center banks, such as Wells Fargo and Bank of America, as well as regional banks and thrift institutions. 5-year returns (annualized): 14.4 percent Expense ratio: 0.35 percent Dividend yield: 2.5 percent This fund seeks to track the investment performance of the Dow Jones U.S. Select Insurance Index. The insurers are involved in life, property and casualty and full-line insurance. Major holdings include Chubb, Progressive and The Travelers Companies. 5-year returns (annualized): 23.8 percent Expense ratio: 0.39 percent Dividend yield: 1.6 percent This ETF aims to track the performance of the S&P Capital Markets Select Industry Index. Companies in the index are involved in industries such as asset management and custody, financial exchanges, as well as investment banking and brokerages. The ETF's major holdings include Robinhood, StoneX Group and Virtu Financial. 5-year returns (annualized): 22.5 percent Expense ratio: 0.35 percent Dividend yield: 1.7 percent This fund aims to track the return of the MSCI U.S. Investable Market Real Estate 25/50 Index. The fund invests in REITs and companies involved in the purchase of commercial real estate, hotels and other real property. Top holdings include Prologis, American Tower and Welltower. 5-year returns (annualized): 7.7 percent Expense ratio: 0.13 percent Dividend yield: 4.0 percent Before purchasing an ETF, it's useful to know some key information about the fund. Here are some areas to pay close attention to. Sub-sector – Make sure you know which sub-sector you're investing in and the unique characteristics of companies in that industry. Not all financial sector companies respond the same way to different economic conditions. Investment track record – Looking at how the fund has performed over short-, medium- and long-term time frames will help give you an idea of what to expect in terms of the fund's investment return. Of course, past performance is not a guarantee of future results. Expense ratio – You'll want to know how much the fund charges annually because the fee comes straight out of your investment return. Larger funds can often have lower expense ratios because they have a greater amount of assets to spread their costs over. Fund holdings – It's worth peeking at the fund's top holdings to make sure its actual investments align with its sub-sector and investment objectives. Typically, the holdings will make sense based on the fund description but watch out for holdings that don't line up with the fund's name or objective. The best brokers for ETFs can help you find attractive funds with strong long-term returns. If you're looking for an easy way to invest in the financial sector, ETFs provide a simple option to achieve that. You can choose a broad financial sector ETF or narrow your approach and invest in ETFs that track specific sub-sectors. Make sure you understand how each sub-sector is impacted by different economic conditions and pay close attention to the ETF's expense ratio. If you're just starting out, a broadly diversified fund based on indexes such as the S&P 500 might be a better fit. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. Sign in to access your portfolio
Yahoo
26-04-2025
- Business
- Yahoo
First Citizens prefers buybacks over M&A, for now
First Citizens BancShares is sticking with its share-repurchase strategy, with executives saying Thursday that buybacks are the best way to return capital to shareholders in the current environment, which has been marked by tariffs-driven market volatility and economic uncertainty. That doesn't mean mergers and acquisitions, which have been a key factor in First Citizens' recent expansion, are off the table, according to Craig Nix, First Citizens' chief financial officer. "I would not say that our appetite for M&A has changed," Nix said during the bank's first-quarter earnings call. "We're really dealing with what's in front of us right now, and that's the share repurchase plan. That's the most effectual way for us to return capital at this point in time." Still, "M&A remains an important part of our growth strategy over the long term," he said. The Raleigh, North Carolina-based parent of First Citizens Bank is two years out from buying a significant portion of Silicon Valley Bank, whose abrupt failure in mid-March 2023 destabilized the industry and forced banks of all sizes to secure their deposits and calm jittery customers. The deal nearly doubled First Citizens' total assets, and it came just over a year after the company had already doubled in size with its acquisition of CIT Group in New York City. As a result, First Citizens' capital ticked upward. Its common equity Tier 1 ratio, which compares a bank's capital against its assets, hovered at a little over 13% in 2024. In the first quarter of this year, the CET1 ratio came in slightly lower at 12.8%, the company said in a press release Thursday. The goal is to reduce the ratio to 10.5% to 11% by the end of next year's first quarter, Nix said. During the period ending March 31, 2025, First Citizens repurchased $613 million of common shares, bringing total share repurchases since August to $2.4 billion. In total, the $228.8 billion-asset company is aiming to buy back $3.6 billion of shares through its current repurchase program. To get to the 10.5% to 11% CET1 target, the company is thinking about implementing another buyback program in the second half of this year and will share more information in July, Nix said. As of midday Thursday, the company's stock was up about 1%. Like much of the rest of the banking industry, its share price has declined this year. It's currently down about 15.4% since Jan. 1, compared with a 14.8% drop in the KBW Nasdaq Bank Index. During First Citizens' earnings call on Thursday, Keefe, Bruyette & Woods analyst Chris McGratty wanted to know if the bank currently sees an opportunity to step up the pace of buybacks in order to reach its CET1 target. Nix said the company's current stock price "is making our repurchases more effectual, and we're able to repurchase more shares than otherwise," but noted that buybacks are dictated by First Citizens' capital plan and said the company is "very hesitant to deviate from" that plan. In the first quarter, First Citizens' net income totaled $483 million, down 34% from the year-ago period in part because of a decline in net interest income. Results also included acquisition-related expenses of $42 million, plus costs related to taxes and write-downs of intangible assets. Earnings per share of $34.47 missed expectations. Analysts surveyed by S&P Capital IQ had expected the company to report $37.43 per share. On an adjusted basis, EPS for the quarter was $37.79. Meanwhile, net interest income of $1.7 billion was down 8.5% year over year, and fee income of $635 million was up 1.3%. Expenses, which totaled $1.5 billion, rose 8.5% as provisions for credit losses more than doubled to $154 million, up from $64 million in the year-ago quarter. First Citizens largely maintained its outlook for the rest of the year. It slightly reduced its net interest income expectations for 2025 to $6.55 billion-$6.95 billion, down from $6.6 billion-$7 billion it projected in January, and it increased its forecast for deposits to $163 billion-$168 billion, up from $162 billion-$167 billion. The loan growth forecast remained unchanged at $144 billion-$147 billion.
Yahoo
15-04-2025
- Business
- Yahoo
Bank Stocks Jump as Bank of America, Citi Results Are Latest to Beat Estimates
Shares of major U.S. banks surged after Bank of America (BAC) and Citigroup (C) became the latest lenders to report better-than-expected first-quarter earnings on the back of a stock-trading boom. Bank of America shares were up 4.5% Tuesday afternoon, while those of Citi were 3.8% higher. Both banks were among the top gainers on the S&P 500. The benchmark index's financial services sector was its best performer in recent trading. The KBW Nasdaq Bank Index (BKX) was more than 2% higher in recent trading. Morgan Stanley (MS) and Goldman Sachs (GS) were both up around 2%. Shares of JPMorgan Chase (JPM), one of the world's largest banks, were little changed. Comments from Bank of America CEO Brian Moynihan on the company's earnings call noting that the U.S. economy is on a solid footing despite the turmoil around President Donald Trump's tariffs also lifted investor sentiment. Concerns of a looming recession and a spike in inflation have mounted in recent weeks since Trump began launching tariffs on U.S. trading partners. Citigroup CEO Jane Fraser said Tuesday that she believed the U.S. will remain the "world's leading economy." She also said she was bullish about the prospects for the U.S. dollar, which is on track to have its worst two-month stretch since 2002. "When all is said and done, and longstanding trade imbalances and other structural shifts are behind us, the U.S. will still be the world's leading economy, and the dollar will remain the reserve currency," Fraser said. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
08-04-2025
- Business
- Yahoo
Here Are Three Things To Watch for in Big Bank Earnings
Major U.S. banks begin reporting quarterly results on Friday against a backdrop of tariff turmoil that has roiled the markets and the economy. Analysts said that while tariffs may not directly affect the banks themselves, they likely will take a toll on all their customers. Analysts will look for clues about the future in the Big Banks' loan growth, dealmaking, and credit quality after sweeping tariffs were announced in the U.S. on April U.S. banks begin reporting their quarterly earnings on Friday, investors will watch to see whether fears about tariffs are hampering clients' borrowing appetites and ability to repay loans. Banks' results coming soon from the first quarter will matter, but the fallout from April 2, which President Donald Trump dubbed "Liberation Day," may be more consequential. President Donald Trump's tariff plans have raised recession risks and triggered sell-offs in stock markets, complicating the outlook for the banking industry. 'While banks might not be directly impacted by tariffs, they are exposed to every industry that is,' Jason Goldberg, an analyst at Barclays, wrote in a note Friday. The latest bout of uncertainty has hammered bank stocks. The KBW Nasdaq Bank Index (BKX) is down about 18% this year through Tuesday's close, outpacing the decline in the S&P 500 index, as investors worry that an economic downturn will make it hard for consumers and businesses to repay debts. The KBW Nasdaq index of regional banks or KRX, is off a similar amount. The last week has 'completely upended' expectations for the industry, Scott Siefers, a bank analyst at Piper Sandler, wrote on Monday. 'We doubt we'll get all the answers we want with earnings, but at least banks will have the chance to respond to the emerging backdrop and to shape expectations,' Siefers said. Bank CEOs will share updates starting on Friday, when JPMorgan Chase (JPM), Wells Fargo (WFC), and Morgan Stanley (MS) report their quarterly earnings. Other megabanks such as Bank of America (BAC) and Citi (C) will follow next week, as will regional banks such as Pittsburgh-based PNC Financial Services Group (PNC). JPMorgan Chase CEO Jamie Dimon, in his annual letter to shareholders on Monday, already warned that the bank is 'very cautious' given the uncertain environment. The effects of the latest trade news may not show up clearly in banks' backward-looking results, but it will likely effect their outlooks. 'Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,' Dimon said, adding that the 'quicker this issue is resolved, the better.' Here are some key themes to watch as banks report earnings. Just after Trump's election, bank CEOs were hopeful that optimism from businesses would lead to a boom in loans. But there are 'early signs that borrowers are hitting the pause button and pushing out decision making,' Brian Foran, a bank analyst at Truist Securities, wrote in a Monday note. Business loan growth is hovering around 1% to start the year, Foran wrote, rather than climbing to 4% or even 5%, as is usually the case in spring. Activity, he wrote, is 'starting to flat line when it should be ramping." Loan activity tends to follow gross domestic product (GDP) trends and should slow because growth expectations have fallen significantly, Barclays' Goldberg wrote. He and other analysts will closely watch banks' outlooks for the year ahead and whether they'll lower expectations for loan activity. Fewer loans will tamp down how much money banks can make this year, as they won't be able to earn as much interest. Some banks 'might look to keep their guidance in hopes that now that the tariff backdrop is known, companies will act and adjust,' the Barclays analysts said. It's not just run-of-the-mill business loans facing lower growth. Dealmaking at banks' Wall Street operations is also slowing, as corporations shelve plans to acquire competitors or tap capital markets for financing. Banks had been hoping to earn hefty fees on those deals, helping revenue stay elevated if loan growth remained sluggish. But several companies have reportedly delayed plans to go public, including the Buy Now, Pay Later (BNPL) company Klarna, the ticket marketplace StubHub, and the trading platform eToro. Uncertainty has also weighed on merger activity. Pipelines for deals 'are still strong,' the Barclays report said. 'The question is, will that fall away or simply be pushed out, as an improved market backdrop is likely needed for realization,' Goldberg wrote. Market volatility isn't all bad news for banks, because the major Wall Street trading desks earn money off any buying and selling. But regional banks don't have as much 'air cover' from trading, Goldberg wrote, and could thus take a bigger hit. If the economy is headed for darker days, borrowers will have a tougher time repaying their loans—whether for an office building or consumer credit card. Though a recession is still not assured, slower GDP growth will likely force banks to write off loans from borrowers who can no longer repay them, according to Betsy Graseck, a bank analyst at Morgan Stanley. 'We have to expect a slowdown at best,' Graseck wrote Monday in a note to clients, noting that 'consumers do not have savings levels to absorb these tariffs and continue spending at pre-tariff levels.' Losses at banks have stayed benign in recent years, even as high interest rates challenged some borrowers. But now the future is 'more of a wildcard,' wrote Piper Sandler's Siefers. Even so, banks are coming into any turbulence with 'solid capital strength,' he wrote. The industry's buffers have risen sharply after they proved inadequate during the 2008 financial crisis, prompting regulators to require bigger cushions going forward. 'We are thankful for the group's strong capital levels,' Siefers said in the report. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
05-04-2025
- Business
- Yahoo
Bank Stocks Tumble as Tariffs Raise Recession Risks
Shares of major U.S. banks were sharply lower on Thursday as Wall Street reacted to President Donald Trump's announcement of sweeping tariffs that economists warn could stunt economic growth and reignite inflation. The KBW Nasdaq Bank Index (BKX) was down more than 8% in recent trading. A decline of that size would represent the index's worst day since the regional banking crisis of March 2023, when the collapse of Silicon Valley and Signature Banks coincided with an 11% drop for the benchmark index. Regional banks Western Alliance (WAL) and Zions Bancorp (ZION), both down double digits Thursday, were leading the index's decliners. Among the largest U.S. banks, Citigroup (C) and Bank of America (BAC) were the hardest hit, falling 10% and 9%, respectively. Shares of JPMorgan Chase (JPM), one of the world's largest banks, were down 6%, while investment banks Morgan Stanley (MS) and Goldman Sachs (GS) were both off more than 7%. Banks aren't directly affected by Trump's tariffs, which apply first to companies that buy and sell goods. However, like all services, banking benefits from a healthy economy in which businesses and consumers are borrowing, investing, and spending. Economists have warned that the new tariffs, which could lift America's overall tariff rate to its highest level in a century, threaten to slow economic growth, reduce investment, and weigh on consumer spending. Many investors and economists are concerned the tariff fallout could result in stagflation and complicate the Federal Reserve's efforts to bring inflation down to its 2% target without pushing the economy into a recession. Deutsche Bank analysts on Wednesday warned that the tariffs as outlined could shave 1 to 1.5 percentage points off U.S. gross domestic product growth this year—"meaningfully raising recession risks"—and tack a similar amount onto the core inflation rate. Read the original article on Investopedia Sign in to access your portfolio
