Like most other sectors, financials got hammered Thursday as the broader market sold off. They continued lower Friday, even as the broad stock market indexes rallied.
XAutoplay: On | OffAhead of Thursday’s rout, the top three U.S. financial funds outperformed the S&P 500 based on their year-to-date returns through Aug. 8. However, they all lag the benchmark index over the past three and five years.
Leading the group is iShares MSCI Europe Financials (EUFN), with a year-to-date gain of 26.7% through Aug. 8, more than double the S&P 500’s 11.9% return. The ETF’s 4% rise for the month also led the top performers (see table below).
EUFN, which tracks the MSCI Europe Financials Index, has attracted $1.7 billion in assets since its January 2010 launch. Shares dipped the past three sessions and may be heading toward a potential test of the 50-day moving average line.
The U.K. was its biggest exposure as of Aug. 9, at nearly 29% of assets. France was next with about 12%, followed by Switzerland, Spain and Germany at roughly 11% each. The biggest holdings included the U.K.’s HSBC Holdings (HSBC), Spain’s Banco Santander (SAN), Allianz of Germany and France’s BNP Paribas (BNP). The top 10 stocks accounted for 44% of assets.
IShares Global Financials (IXG) came in second with a 15.8% YTD performance — and a 3.3% gain for its monthly return. It too may soon test support at its 50-day line.
The $464.8 million fund, which marks its 16th anniversary in November, tracks the S&P Global 1200 Financials Sector Index. The U.S. weighed in with 44% of assets, with the U.K. and Canada a distant second and third at 8% and 7%, respectively. Australia and Japan made up 6% and 5%.
Half of its top 10 holdings were U.S.-based: Berkshire Hathaway (BRKB), JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C). Others in the top 10 included HSBC, Banco Santander and Allianz. The top 10 stocks accounted for 28% of assets.
Both EUFN and IXG carry a 0.48% expense ratio.
SPDR S&P Capital Markets (KCE) has returned 13.7% this year through Aug. 8. It sank just below its 50-day line Thursday as the U.S. stock market sold off. If it can make a solid rebound, that could set up a buy opportunity. But the market uptrend is under pressure, which increases risk of all purchases.
The $108 million fund, which will turn 12 in November, tracks the KBW Capital Markets Index. Its top holdings included Ameriprise Financial (AMP), T. Rowe Price Group (TROW) and TD Ameritrade Holding (AMTD). Nearly a quarter, or 23%, of assets were invested in the top 10 names. Its expense ratio is 0.35%.
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