Regional Banking ETF: 3rd Best Year-Over-Year Stock Performer?
16 October 2008 at 2:50 pm by Gary Gordon
It's possible that I've got my signals crossed. And it's conceivable that a greater percentage of the negative impact on bank share prices came in 2007.
Still, could streetTracks Regional Banks (KRE) actually be the third best stock segment behind consumer staples and biotech? Could the over-leveraged, under-capitalized, sub-prime lending offenders be in the same relative safety camp as toilet-paper-and-toothpaste stocks in the SPDR Staples Fund (XLP)?
Here's how I have it shaking out for the Top 5 and Bottom 5… year-over year:
| Top 5 Year-Over-Year Stock ETF Performers | ||||
| SPDR Consumer Staples (XLP) | -12.30% | |||
| SPDR Biotechnology (XBI) | -13.50% | |||
| streetTracks Regional Banking (KRE) | -18% | |||
| iShares Dow Jones Transports (IYT) | -21% | |||
| iShares Medical Devices (IHI) | -22.50% | |||
| Bottom 5 Year-Over-Year Stock ETF Performers | ||||
| iShares Dow Jones Telecom (IYZ) | -51% | |||
| SPDR Financial (XLF) | -52% | |||
| iShares Goldman Semiconductors (IGW) | -52.25% | |||
| SPDR Metals and Mining (XME) | -54% | |||
| iShares Dow Jones Insurance (IAK) | -57% | |||
Overall financials vis-a-vis XLF dropped an astonishing amount for a broad sector. Yet how can the regional bankers escape seemingly intact?
For one thing, none of the top 10 holdings for streetTracks Regional Banks (KRE) resembles the top 10 holdings of the SPDR Financial (XLF). In fact, the former has smaller bank players while the latter has the biggest financial names in the business.
For instance, XLF has the brokerages like Goldman, Morgan and Merrill. It has the mega-banks like Bank of America and Chase. It even has the insurers like AIG.
It follows that the big name financial companies are the ones who got themselves in the most trouble with sub-prime exposure. They were also the favored targets of naked short sellers.
In contrast, it would appear that a great many of the regional banks didn't get in over their heads. Or at least… they didn't get in over their heads quite so badly. (Many of these institutions may fold just the same, but investors haven't been hit with the same level of ugliness.)
Indeed, the price movement has been far more favorable to streetTracks Regional Banks (KRE). So much so, in fact, that it appears to have opened up a notable advantage over the SPDR S&P 500 (SPY).
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