With the majority of analysts expecting three interest rate hikes in 2018 from the U.S. Fed, investors looking to gain exposure to a range of securities which will benefit from rising interest rates have increasingly looked to U.S. financials to make up a more significant percentage of overall portfolio weights moving into the new year.
A rising interest rate environment is well-suited to the financials sector, and while some of the forward momentum has been priced into this ETF today, any additional rate hikes in 2018 or indications that interest rates may move higher than expected or at a faster rate would be enough to take this ETF meaningfully higher potentially in the near-term.
One exchange traded fund (ETF) which has remained a top pick of mine for some time now is the Financial Select Sector SPDR Fund (NYSE:XLF), an ETF with a diversified base of U.S. financial institutions which stand to benefit from a rising interest rate environment and less regulation this year.
This ETF is perhaps one of the safest ways to play U.S. financials, based on the portfolio construction underpinning the fund.
This ETF has a very low management expense ratio (MER) and features a number of regional banks which may not be present in other U.S. financial ETFs, making this one of my favorite picks for investors looking to cash in on a pro-growth agenda which appears to be finally kicking into gear.
Invest wisely, my friends.
