Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Financial Select Sector SPDR 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 never   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

Rates haven't risen fast enough yet to give a boost to banks, and our analysts don't believe that interest-spread revenue at banks will grow anytime soon.
High unemployment could constrain consumers' willingness to borrow and their ability to repay their loans, potentially leading to large loan write-downs.
If interest rates rise, that could hamper underwriting activity at investment banks. Read more 

First Name
Last Name
Email Address
Zip Code
Create Password
Verify Password
(6-15 characters; case sensitive)

South Korea: Developed or Emerging? 
Watch more 

Premium Membership

View all of our analyst reports with a free trial to Morningstar.com Premium.