It is no secret that low, and even negative, interest rates throughout major developed markets are pinching financial services stocks and exchange-traded funds. The punishment extends beyond U.S.-focused ETFs.
Negative interest rate policies (NIRP) should lower the cost of capital with the theoretical result being companies wanting to spend more, which should prompt banks to boost lending. However, financial services ETFs are not benefiting.
Financials And The Fed
Obviously, the United States does not have negative interest rates, but the Financial Select Sector SPDR Fund (NYSE: XLF) and rival diversified financial services ETFs are among this year's worst-performing sector funds. XLF, the largest ETF tracking the S&P 500's second-largest sector weight, is off 2.1 percent. XLF has rallied off its February lows, but the ETF's most recent upside is likely attributable to expectations that the Federal Reserve will raise interest rates next month, indicating XLF is back where it often is: waiting on ...
/www.benzinga.com/trading-ideas/long-ideas/16/05/8016342/what-negative-rates-are-doing-to-financial-services-etfs alt=What Negative Rates Are Doing To Financial Services ETFs>Full story available on Benzinga.com
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