Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
SPDR S&P Bank ETF KBE is appropriate as a tactical satellite holding for investors seeking pure exposure to the banking sector. This narrowly focused exchange-traded fund tracks a benchmark index that excludes nonbank   Read more 

Bull Case

KBE's equally weighted portfolio provides meaningful diversification benefits and gives the fund a slight contrarian bent.
The fund offers an attractive way to position for a steepening yield curve.
Despite net-interest-margin pressure in the short term, over the longer term, higher interest rates should help U.S. banks. Read more 

Bear Case

Our analysts don't believe that interest spread revenue at banks will grow anytime soon. That is pressuring banks' margins.
The fund's holdings face an unfavorable regulatory environment that may materially alter their business models.
High unemployment could constrain consumers' willingness to borrow and their ability to repay their loans, potentially leading to large loan write-downs.  Read more 

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