The best ETFs to ride the current financial wave

In a financial and insurance environment that has faced turbulence in recent years, the surprising resilience of these institutions has emerged as a testament to their robustness.

The challenges caused by rising inflation rates and market instability have put many global economies to the test, with the financial sector experiencing a significant drying up of resources and investment opportunities.

However, despite the adversity, key elements of the sector have continued to thrive thanks to the intervention of local governments and fiscal policies aimed at mitigating the financial impact on people and businesses.

In this scenario of challenges and adaptations, two players emerge in the Exchange-Traded Fund (ETF) sector that deserves particular attention in 2023. As governments and institutions work to stabilize the economy, the vitality of a functioning financial system becomes a crucial prerequisite for a possible economic recovery following the current instability. We will discover the two best ETFs in the financial sector which, through their solidity and investment strategies, promise to be interesting for investors in this dynamic scenario.

Amundi Euro Stoxx Banks UCITS ETF Acc

The Amundi Euro Stoxx Banks UCITS ETF Acc represents an option to explore for investors seeking exposure to the Eurozone banking sector through a diversified and efficient investment vehicle. With assets managed of approximately 760 million Euro, the ETF was launched in November 2018 and boasts a medium/long-term history.

The ETF adopts a full physical replication strategy, investing directly in all components of the EURO STOXX Banks index. The ETF’s overall expense ratio (TER) is attractive, set at 0.30% per annum, offering an acceptable balance between return and cost. It should be noted that dividends are accumulated and reinvested in the ETF, contributing to potential long-term capital growth.

The portfolio distribution reflects a significant concentration in the top 10 holdings, with a cumulative weight of 79.34%. BNP PARIBAS SA, BANCO SANTANDER SA, and BANCO BILBAO VIZCAYA ARGENTARIA SA constitute the main positions, highlighting geographical diversification significant, with 27.21% in Spain, 20.51% in Italy and 19.51% in France.

From a returns perspective, the ETF has demonstrated strength over the past few years. Despite a slightly negative return in the last month and the current year, the three- and five-year yields show notable performance, +78.64% and +53.96% respectively. The volatility is quite high, with a maximum five-year drawdown of -51.54%.

In summary, the Amundi Euro Stoxx Banks UCITS ETF Acc represents a solid choice for investors seeking exposure to the Eurozone banking sector with careful financial management and an acceptable balance between risk and return.

iShares EURO STOXX Banks 30-15 UCITS ETF (DE)

The iShares EURO STOXX Banks 30-15 UCITS ETF (DE) is another option worth considering for investors interested in the Eurozone banking sector. With assets managed of approximately 864 million Euro, this ETF was launched in 2001 and therefore has a longer history than the previous one.

Like Amundi, the iShares ETF adopts a full physical replication strategy, investing directly in the components of the EURO STOXX Banks 30-15 index. However, unlike its competitor, this ETF pays dividends to investors, offering a regular income stream, annually.

The TER of the iShares ETF is slightly higher, at 0.52% per annum, but the choice between accumulation and distribution can be decisive based on investor preferences. The portfolio distribution reflects the maximum weighting of 30% for the largest company and 15% for the second largest.

Regarding returns, the iShares ETF has demonstrated solidity, with a positive performance over the three- and five-year period, +74.64% and +48.73%. Volatility is manageable, and the maximum five-year drawdown is -51.81%, indicating overall resilience.

In conclusion, the iShares EURO STOXX Banks 30-15 UCITS ETF (DE) offers solid exposure to the Eurozone banking sector, with dividend payouts as a potential benefit for investors looking for a regular income stream. However, the investor should carefully evaluate his preferences in terms of dividend distribution and the slight increase in TER compared to its competitor.

Disclaimer The information and considerations contained in this article should not be used as the sole and principal basis on which to make investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation for public savings.

Original article published on Money.it Italy 2024-02-17 16:09:00. Original title: Vuoi cavalcare l’onda della finanza? Ecco gli ETF migliori per farlo