The iShares Dow Jones US Financial Sector ETF (IYF) seeks to track the performance of the Dow Jones US Financials Index. It has a market cap of $1.6 billion.
As of January 5, the Vanguard Financials ETF has a market cap of $3.4 billion. It seeks to track the MSCI US Investable Market Financials 25/50 Index.
The Financial Select Sector SPDR ETF (XLF) ETF attracts the most attention among US financial ETFs. This is because 87% of the fund is made of large-cap stocks.
Keeping with my tradition of comparing the year that was to the year that I expected, here’s a summation of what went according to plan, what was sort of in the ball park and what was a total miss.
Retail REITs were the top performers of the iShares US Real Estate ETF (IYR) on January 5, 2016, with a return of 2.5%. The healthcare REIT subgroup ended the day with a positive return of 2.4%.
If inflationary pressures cause interest rates to rise, this can sometimes work in favor of owners of warehouses or self-storage facilities. The Federal Reserve raised the interest rates with expectations of stable long-term inflation.
Industrial properties suffered a major setback during the 2008 financial crisis. The vacancy rate for industrial properties increased, and the need for new industrial buildings was close to zero.
The performance of industrial REITs in the past week was on the positive side. Industrial REITs combine assets such as a warehouse, cold storage, research and development sites, and general-purpose flex offices.
Freeport-McMoRan’s (FCX) trailing one-year return is the lowest at -70.7%. The stock had a steep fall on December 28, after its executive chairman stepped down.
Hotel and resort REITs were the worst performing sub-group of the iShares US Real Estate ETF for the week ending December 18, with negative returns of 1.8%.
For the week ended December 18, the iShares Mortgage Real Estate Capped ETF returned 4%. Resource Capital and New Residential Investment were top performers.
With the Federal Reserve raising the rates, many could have speculated that mortgages would take a plunge. However, mortgage REITs rose instead.
For the week ended December 18, 2015, mortgage and residential REITs outshined other sub-groups with positive average returns of 2.2% for both.
KCE’s RSI has improved from 25.9 on September 4, when global stock markets plunged following the devaluation of the yuan.
On December 11, shares of KIE closed at $69.27, below its 100-day, 50-day, and 20-day moving averages of $70.29, $71.11, and $71.75, respectively.
On December 11, KRE closed at $41.65, below its 100-day moving average of $42.71, its 50-day moving average of $43.54, and its 20-day moving average of $44.47.
On December 11, KBE closed at $33.76, below its 100-day, 50-day, and 20-day moving averages of $34.70, $35.00, and $35.65, respectively.
On December 11, IYF closed at $87.08, below its 100-day, 50-day, and 20-day moving averages of $88.80, $89.28, and $90.32, respectively.
The 14-day RSI for the VFH ETF was 36.6 as of December 11. This suggests the stock is approaching oversold levels and may be considered undervalued.