Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Financial Select Sector SPDR ETF XLF is appropriate as a tactical satellite holding for broad exposure to the U.S. financial-services sector. Unlike many other U.S. equity sectors, the financial-services sector still has   Read more 

Bull Case

XLF is the cheapest and most liquid financials-sector fund of any size on the market.
Despite net interest-margin pressure in the short term, over the longer term, higher interest rates should help U.S. banks.
Banks also are in general better-capitalized than in the past, and capital ratios have been improving. Read more 

Bear Case

Our analysts don't believe that interest-spread revenue at banks will grow anytime soon.
If interest rates rise, that could hamper underwriting activity at investment banks.
European sovereign debt problems could cascade across the Atlantic and force the U.S. banking system to absorb some losses. Read more 

Stalled Financials Offer a Bit of Value 
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