Bill Gross Sees 'Extraordinary Long-Term Value' in Regional Banks: 3 ETFs To Watch
Legendary investor, fund manager and PIMCO co-founder Bill Gross sees extraordinary long-term value in regional banks.
In a tweet posted on Oct. 30, Gross said he sees regional bank stocks as a “falling knife” that “hasn't hit ground yet“.
Back in April, the Bond King had bought four beaten-down regional bank stocks trading at 60% to book value:
- Western Alliance Bancorp. (NYSE:WAL)
- Synovus Financial Corp. (NYSE:SNV)
- PacWest Bancorp (NYSE:PACW)
- SPDR S&P Regional Banking ETF (NYSE:KRE)
Gross sold off 80% of that holding in July making “mucho bucks” on them.
The billionaire has again indicated an appetite for regional banks, saying he would be “waiting just a little bit more to own some of these at 60% book and 7% yields.”
Also Read: Regional Banks: Navigating A Goldilocks Scenario Amid Market & Geopolitical Challenges
We highlight three regional bank ETFs that you could keep on your watch list and consider when they touch bottom:
The SPDR S&P Regional Banking ETF (NYSE:KRE)
Trading since 2006, the SPDR S&P Regional Banking ETF (NYSE:KRE) tracks the performance of the S&P Regional Banks Select Industry Index. The fund has an expense ratio of 0.35% and has 49.76% of its portfolio invested in mid-cap regional banks, which large caps commanding a 12.2%. Small-cap regional bank stocks command a good 33.69% of this fund’s portfolio:
| Symbol | Holding | % Assets |
|---|---|---|
| TFC | Truist Financial Corporation | 3.26% |
| MTB | M&T Bank Corporation | 3.16% |
| FHN | First Horizon Corporation | 3.07% |
KRE is down about 32% for the year, trading at $39.64. The ETF has 52-week low of $34.52.
The iShares U.S. Regional Banks ETF (NYSE:IAT)
Launched in 2006, the iShares U.S. Regional Banks ETF (NYSE:IAT) tracks the performance of the Dow Jones U.S. Select Regional Banks Index. The fund has an expense ratio of 0.40% and has 61.14% of its portfolio invested in large-cap regional banks, which mid-caps coming in next at 38.71%.
Top three holdings of the fund include:
| Symbol | Holding | % Assets |
|---|---|---|
| USB | U.S. Bancorp | 14.28% |
| PNC | PNC Financial Services Group, Inc. | 13.26% |
| TFC | Truist Financial Corporation | 11.01% |
IAT is down about 34% for the year, trading at $31.65. The ETF has a 52-week low of $28.80.
The Invesco KBW Regional Banking ETF (NYSE:KBWR)
Trading since 2011, the Invesco KBW Regional Banking ETF (NYSE:KBWR) tracks the performance of the KBW Nasdaq Regional Banking Index. The fund has an expense ratio of 0.35% and has 54.68% of its portfolio invested in mid-cap regional banks, which large caps commanding a 45.26%.
Top three holdings of the fund include:
| Symbol | Holding | % Assets |
|---|---|---|
| WBS | Webster Financial Corporation | 3.93% |
| CFR | Cullen/Frost Bankers, Inc. | 3.88% |
| CBSH | Commerce Bancshares, Inc. | 3.68% |
KBWR is down about 26% for the year, trading at 41.83. The ETF has a 52-week low of $37.49.
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