Financials Lag a Weak Market

What’s doing worse than the overall stock market?  Try financials.

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Since the beginning of 2011, the S&P 500 is flat having given up the year’s gains in the recent 6-week downturn.  However, financial stocks have managed to underperform the lackluster market with the Financial Select Sector SPDR Fund (XLF) down nearly 9% on the year.

Why the under performance? According to Deutsche Bank analyst Matt O’Connor, the decline in financial stocks is due to “recently increased regulatory uncertainty (especially regarding required capital levels), weakening economic data, sluggish capital markets and in general little hope for a meaningful pickup in revenue anytime soon.”

XLF’s top holdings include JP Morgan ChaseWells FargoBerkshire Hathaway and Citigroup.  The ETF’s expense ratio is 0.20% and the fund currently yields 1.08%.

For a complete list of sector ETFs, please visit the ETF Directory.

– ETF MarketPro Staff
June 13, 2011