Why Bank ETFs Are Surging

The U.S. auto industry also gathered momentum in the third quarter with sales rebounding from the coronavirus-related lows and buyers returning to showrooms after plunging the most in the second quarter since the Great Recession.

Against such a backdrop, bank ETFs have been surging over the past month, defying the broader market rout seen in October. Below, we have highlighted them. All these funds have a Zacks ETF Rank #3 (Hold):

SPDR S&P Regional Banking ETF (KRE - Free Report) – Up 13.2%

This fund, having AUM of $1.2 billion and average trading volume of around 9.1 million shares, offers exposure to regional banks. It follows the S&P Regional Banks Select Industry Index, charging investors 35 bps a year in fees. KRE holds 126 securities in its basket.

Invesco KBW Regional Banking ETF (KBWR - Free Report) – Up 11.7%

This fund follows the KBW Nasdaq Regional Banking Index, holding 52 stocks in its basket. It is a relatively less-popular and less-liquid option in the space, with AUM of $29.5 million and an average daily volume of 6,000 shares. It charges 35 bps in fees per year from investors.

First Trust NASDAQ ABA Community Bank Index Fund (QABA - Free Report) – Up 11.6%

This ETF offers exposure to banks and thrifts, and tracks the Nasdaq OMX ABA Community Bank Index, holding 163 stocks in its basket. It has accumulated $54.7 million in its asset base and charges 60 bps in annual fees. It trades in volume of 20,000 shares a day, on average.

iShares U.S. Regional Banks ETF (IAT - Free Report) – Up 10.9%

This ETF offers exposure to 54 small and mid-cap regional bank stocks by tracking the Dow Jones U.S. Select Regional Banks Index. The fund has amassed $246.7 million in its asset base and sees a good volume of 151,000 shares a day. It charges 42 bps in annual fees.

SPDR S&P Bank ETF (KBE - Free Report) – Up 10.6%

This fund offers equal-weight exposure to 88 banking stocks by tracking the S&P Banks Select Industry Index. Regional banks dominate the portfolio with 72.7% share while thrifts & mortgage finance, diversified banks, other diversified financial services and asset management & custody banks take the remainder. It has amassed $1.6 billion in its asset base while trading in heavy volume of 2.6 million shares a day, on average. The product charges 35 bps in annual fees.

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