Financial Select Sector SPDR Fund (XLF) Buy,…

Financial Select Sector SPDR Fund (XLF)

54.84

+0.31 (0.57%)

as of Sep 25, 2026, 8:00:00 pm Market Open.

58 watching

BUY

We're just starting to see the seasonality for US financials, which usually runs from mid-December to mid-April, though it can start in January. US financials have recently pulled back compared to the S&P 500. They're much more sensitive to interest rates than Canadian banks, because the Canadian banks have much higher dividends. US financials react strongly to inflation and interest rate movement. At the beginning of the year, inflation and interest rates tend to pick up. He's bullish on both US and Canadian banks. In the States, he uses the XLF, which should do well coming up in the new year, especially if interest rates and strength in the economy start to pick up. If investors can look ahead to when Omicron numbers decline, which they will, they'll see this sector do quite well seasonally from now till mid-April.

BUY

XLF vs. VFH vs. ZWK Likes US banks. ZWK is an equal weighted basket of large and regional banks. It will benefit when you see the economy recover, 6-12 months out, with lower loan losses, steepening yield curve. Yield about 6.9%, a combination of dividends and covered call options. Makes sense if you're in it for the income. XLF and VFH don't have the covered call, do have a lower expense ratio, and let you capture the upside from the underlying securities.

BUY

Top 2 or 3 ETFs until 2022. He likes SMH-N - semiconductors. XLF-N still has upside as the financials have underperformed. Canadian banks stick out as well. They are sitting on a whack of cash and have not been able to raise dividends. They will probably take some loan loss provisions back into earnings soon.

HOLD

There is a view that the US could potentially further lower rates, but if the US follows the trade agreement, it is possible they could even raise rates. If you have not been in the US financials up until now, then you have probably missed the best of the run. Canadian banks are probably fairly fully valued. The biggest opportunities in the banking sector are currently in Europe.

DON'T BUY

He would stay away from this space. He sees deposit rates coming up and the flat yield curve making it difficult for this space to make money. Not a good time for banks. He would stay away.

PAST TOP PICK

(A Top Pick Dec 26/17, Down 13%) He will continue to like holding US bank stocks. Rising interest rates will help this ETF. He would not buy this for the yield, which is near 1.8%.

PAST TOP PICK

(A Top Pick Dec 18/17, Down 2%) Thinks it will do quite well next year. There’s been a rotation out of tech into value, which is where you find financials.

WATCH

Spread curves are flattening, which he interprets as a cautionary signal. He would pay attention to the recent consolidation as another sign of caution. The provisions for credit losses are the lowest he has seen – be careful.

PAST TOP PICK

(A Top Pick February 22/18 Down 2%) He sold it in early April when the seasonal trend peaked. Rising interest rates has not been benefitting the financial sector as would normally be the case – measured as under-performing the broad market index. He feels the narrative is changing. Technically it does not look good to him. He would not be here now.

BUY

XLY-US or XLF-US? January saw massive gains in the U.S., which was too much, too soon. So, he pulled back and held a lot of cash. Then, in early-Feb he bought both ETFs. He recommends buying both right now.

COMMENT

HFU or XLF? A double-leveraged ETF (HFU) carries more risk that isn't present in a single-leveraged one. Be careful with these. Not for long-term investors. Generally. If long-term, stick with a plain vanilla ETF instead of the double-leverage one.

PAST TOP PICK

(A Top Pick Sept. 25/17, Up 17%) There are three drivers of U.S. banks. One is de-leveraging is done with corporations and household both in great shape. Two, U.S. bank de-regulation and, three, are interest rates are rising. All are tailwinds for the U.S. economy.

TOP PICK

US Banks primarily. The banks take your money in and lend it out at a higher rate. Rising 10-year rates help that. They have a seasonal period until mid-April.

TOP PICK

This one has all the big U.S. banks. About 49% U.S Banks, 30% insurance companies, also, and about 10% Berkshire. It really represents the heavyweight in the U.S. financial sectors and he thinks they are going to do very well. Obviously not just because of the tax cuts, but because of Dodd-Frank and also with increasing interest rates they are going to get better net interest margins. Lots of reasons to like the U.S. banks.

TOP PICK

This has to do with the US tax deregulation and the potential for a higher interest rate spread.

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Financial Select Sector SPDR Fund (XLF)