Investors pull record $174m from ETF stuffed with bank stocks
Bank stocks typically do better when interest rates are rising because the firms can charge more for loans
Falling treasury yields may have been the straw that broke the camel’s back for investors in an exchange-traded fund (ETF) stuffed with bank stocks. Investors yanked $174m from the iShares US Financial Services ETF, or IYG, on Tuesday. That was a record outflow for the fund which — with more than 60% of its holdings in US banks — has the largest exposure among broad financials ETFs. And volume was more than $214m, almost 15 times the average daily turnover in the past year. Mounting trade war concerns and declining treasury yields this week have put pressure on bank stocks. The yield on 10-year treasuries was as low as 2.88% Wednesday, the lowest since June 1, putting investors’ hopes for 3% on hold. Bank stocks typically do better when interest rates are rising because the firms can charge more for loans. The market also may be reacting defensively ahead of the first round of bank stress tests, due to hit after the market close on Thursday. The Federal Reserve’s instructions for 20...
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