The BMO Equal Weight US Banks Index (ZBK ETF) is index fund that invests primarily in the US banking sector. It’s ideal for long term investors who are bullish on the US banking sector. Index ETFs are quite popular mainly because of their low fees and straightforward investment strategy.
The manager of the fund builds a portfolio designed to replicate, to the extent possible, the performance of the Solactive Equal Weight US Bank Index, net of expenses. The Fund invests in and holds the Constituent Securities of the Index in the same proportion as they are reflected in the Index.
Methodology used by Solactive Equal Weight US Bank Index
The index includes companies that fulfill the following criteria:
- Current constituent of the Solactive US Broad Market Index.
- For new index constituents there must be a minimum market capitalization of at least USD. 10 billion, for current index constituents the minimum market capitalization must be at least USD 7.5 billion.
- Minimum Average Daily Value Traded of USD 10 million (past 3 months).
- Must be a Commercial Banks or a Savings Institutions
The Solactive Equal Weight US Bank Index is a financial index that measures the performance of banks listed on major US stock exchanges. It is an equal-weighted index, which means that each stock in the index is given equal weighting, regardless of its market capitalization. This differs from market capitalization-weighted indices, where stocks with larger market capitalizations have a greater influence on the index’s performance.
Current market conditions (US banking sector)
The collapse of Silicon Valley Bank (SVB) in mid-March highlights the dangers of aggressive central bank interest rate hikes. SVB’s main problem was its large holding of long-duration bonds, which lost value as bond yields rose in 2022. This has little to do with the bank failures that occurred during of the 2008 financial crisis. These were mainly due to losses on mortgage-backed securities.
The Fed’s new term funding program should prevent the SVB’s problems from circulating on other banks, but the episode highlights the dangers caused by rapid monetary tightening.
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ZBK Stock Profile
ZBK Stock 52 weeks high and low
ZBK ETF Holdings
|9.17%||FIRST CITIZENS BANCSHARES INC/NC|
|6.35%||FIRST HORIZON CORP|
|5.88%||HUNTINGTON BANCSHARES INC/OH|
|5.84%||WELLS FARGO & CO|
|5.83%||GOLDMAN SACHS GROUP INC/THE|
|5.71%||BANK OF AMERICA CORP|
Consult issuers’ website for up-to-date data