SPDR S&P Bank ETFKBE

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 ETF tracks a benchmark index that excludes nonbank financial institutions, 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.

Capital ratios are improving. Read more

Bear Case

The fund's holdings face an unfavorable regulatory environment that may materially alter their business models.

Interest-rate spread revenue has remained flat or fallen at most banks, putting pressure on their margins.

High unemployment could constrain consumers' willingness to borrow and their ability to repay their loans, potentially leading to large loan write-downs. Read more