How Has BAC’s Stock Performed in 2016?



BAC underperformed peers YTD

In 2016, so far, shares of Bank of America (BAC) have underperformed the financial sector and the broader market. The Financial Select Sector SPDR ETF (XLF) represents the financial sector, while the SPDR S&P 500 ETF (SPY) represents the S&P 500 Index.

Year-to-date, the financial sector has returned 2%, while SPY has risen 7%. In comparison, Bank of America has shed 9% during the year so far. However, in the last three months, shares of the bank have risen 20% on improving economic fundamentals and analysts’ upgrades.

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Performances of peers

Since the beginning of 2016, the financial sector has been on a roller-coaster ride due to fears of a global recession and a low interest rate outlook. Banks entered 2016 expecting four rounds of rate hikes, but things haven’t turned out in their favor.

At a Federal Open Market Committee (or FOMC) meeting last week, chair Janet Yellen hinted at a rate hike by the end of 2016. Bank investors were delighted by this news.

Year-to-date, shares of major banks Wells Fargo (WFC), Goldman Sachs (GS), JPMorgan Chase (JPM), and Citigroup (C) have generated poor returns. Shares of Wells Fargo have fallen 17% so far, while Goldman Sachs and Citigroup have fallen 9.3% and 9.9%, respectively.

ETF exposure

Investors looking for ETF exposure to Bank of America could invest in the iShares U.S. Financial Services ETF (IYG) or the SPDR Financial Select Sector ETF (XLF). IYG invests 8.0% of its portfolio in Bank of America, while XLF invests 5.4%.


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