The Financials

Over the last several months, there has been no shortage of big issues out in the news that have impacted the markets i.e., Federal Government Shutdown, Healthcare  But recently, the Financial Sector seems to have led the pack with some of the biggest news and issues with regard to regulators, infractions and settlements etc.  It looks like JPM will settle the London Whale episode for a record number, SAC Capital appears on the verge of pleading guilty to securities fraud and now UBS and Deutsche Bank are involved in a probe for possible foreign exchange manipulation.

It’s a big world out there and a big financial services sector as well and there will always be things happening both positive and negative.  However, given the enormity of these settlements and the close proximity and therefore perceived association with the overall financial services arena, one has to ask what the impact may have been or may be on the sector overall at least in the short term.

We took a look at the overall Financial Sector of ETFs and removed the Inverse and Levered Funds to create a baseline group which numbered about 35 Financial Services ETFs and 1 ETN.  At least for this quick post, we simply ranked these Funds by their trailing 6 month performance and listed their respective ETFG Risk and Reward Ratings.  Below are the best performing funds of that baseline group.

Ticker	Name	6M Perf	Risk	Reward
BRAF	Global X Brazil Financials	14.22%	6.36	7.69
EUFN	iShares MSCI Europe Financials Sector Index Fund ETF	11.54%	4.46	4.61
KBWX	Powershares KBW International Financial Portfolio ETF	10.32%	4.81	4.04
IPF	SPDR S&P International Financial Sector ETF	9.45%	4.51	2.90
AXFN	iShares MSCI ACWI ex US Financials Sector Index Fund ETF	8.61%	4.52	4.39
CHIX	Global X China Financials ETF	7.87%	4.97	9.36
IAI	iShares Dow Jones U.S. Broker-Dealers Index Fund ETF	6.59%	4.43	3.70
EMFN	iShares MSCI Emerging Markets Financials Sector Index Fund	6.55%	5.14	6.54
IXG	iShares S&P Global Financial Index Fund ETF	6.26%	5.30	6.96
FEFN	iShares MSCI Far East Financials Sector Index Fund ETF	5.61%	3.97	4.25

In reviewing the list, it seems that the best performers are an eclectic group geographically with very different prospective ETFG Reward Ratings and therefore very different outlooks for the future.  This will be something to watch as we move forward. We encourage everyone to look deeper at these ratings and this group at ETFG Scanner.

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