Financials Sector Equity

Financial sector mutual funds and ETFs invest the majority of their assets... Financial sector mutual funds and ETFs invest the majority of their assets in equity securities of U.S. or non-U.S. financial services companies. These portfolios may own stocks of banks, brokerage firms, asset management companies, insurance companies, consumer credit providers, or fintech (financial technology) firms. They may be actively or passively managed, and depending on their mandate, invest in small, mid, or large-cap stocks. Depending on the sector, these funds can offer both the potential for capital appreciation as well as ongoing dividend income. Financial sector mutual funds and ETFs tend to do well when the economy is growing and the stock market is rising. Bank stocks usually do well when net interest margins are high, and consumer and business defaults are low. Similarly, brokerage firms and asset management companies often see their shares appreciate when the stock market is in a bull trend, trading activity is high, and funds are seeing net inflows. On the other hand, financial sector funds can suffer if the economy is in recession, the stock market is falling, loan defaults are rising, or a country experiences a banking crisis. Last Updated: 01/27/2025 View more View less

Financial sector mutual funds and ETFs invest the majority of their assets in equity securities of U.S. or non-U.S. financial services companies. These portfolios may own stocks of banks, brokerage firms, asset management... Financial sector mutual funds and ETFs invest the majority of their assets in equity securities of U.S. or non-U.S. financial services companies. These portfolios may own stocks of banks, brokerage firms, asset management companies, insurance companies, consumer credit providers, or fintech (financial technology) firms. They may be actively or passively managed, and depending on their mandate, invest in small, mid, or large-cap stocks. Depending on the sector, these funds can offer both the potential for capital appreciation as well as ongoing dividend income. Financial sector mutual funds and ETFs tend to do well when the economy is growing and the stock market is rising. Bank stocks usually do well when net interest margins are high, and consumer and business defaults are low. Similarly, brokerage firms and asset management companies often see their shares appreciate when the stock market is in a bull trend, trading activity is high, and funds are seeing net inflows. On the other hand, financial sector funds can suffer if the economy is in recession, the stock market is falling, loan defaults are rising, or a country experiences a banking crisis. Last Updated: 01/27/2025 View more View less