If you are looking for another sign that the economy is rebounding and that average Americans are finally starting to benefit, you should check out what’s happening with financial stocks.
Shares of regional banks are thriving. Those small financial firms make most of their money from taking deposits and issuing mortgages and small business loans. That’s different from big Wall Street banks, which do significant business in stock and bond trading and in advising companies on mergers and IPOs.
The SPDR S&P Regional Banking ETF (KRE) is up nearly 15% so far in 2021, compared to a gain of 5% for the broader Financial Select Sector SPDR ETF. (XLF)
The latter fund has JPMorgan Chase (JPM), BlackRock (BLK), Goldman Sachs (GS), Bank of America (BAC) and Morgan Stanley (MS) as some of its top holdings.
The regional banking fund, on the other hand, owns banks that more everyday consumers are likely to interact with, such as First Republic (FRC), Regions Financial (RF), M&T Bank (MTB) and Huntington Bancshares (HBAN).
“The regional banks are closer to Main Street. You could argue that they have their thumb on the pulse of the real economy more than the ivory tower types on Wall Street,” said Donald Calcagni, chief investment officer with Mercer Advisors.
Real estate boom is good news for local banks
Many of the top regional banks have been benefiting from the explosive demand for housing — and the mortgage boom should continue as long as interest rates remain low.
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If you are looking for another sign that the economy is rebounding and that average Americans are finally starting to benefit, you should check out what’s happening with financial stocks.
Shares of regional banks are thriving. Those small financial firms make most of their money from taking deposits and issuing mortgages and small business loans. That’s different from big Wall Street banks, which do significant business in stock and bond trading and in advising companies on mergers and IPOs.
The SPDR S&P Regional Banking ETF (KRE) is up nearly 15% so far in 2021, compared to a gain of 5% for the broader Financial Select Sector SPDR ETF. (XLF)
The latter fund has JPMorgan Chase (JPM), BlackRock (BLK), Goldman Sachs (GS), Bank of America (BAC) and Morgan Stanley (MS) as some of its top holdings.
“The regional banks are closer to Main Street. You could argue that they have their thumb on the pulse of the real economy more than the ivory tower types on Wall Street,” said Donald Calcagni, chief investment officer with Mercer Advisors.
-CNN BUSINESS