Not All Banks Are Equal

No doubt you're aware that the financial sector is one of the hottest areas right now. For some, this seems counterintuitive, as banks tend to be interest-rate sensitive, but it actually makes perfect sense. Banks tend to borrow at the short end of the yield curve and lend at the long end. As the yield curve steepens, bank profits should swell. This is true in a general sense, but it is truer for some banks than for others.

Many investors are currently playing this sector, but are they choosing the right vehicle? The S&P Select Financial SPDR Fund (XLF) is highly liquid, averaging more than 53 million shares traded per day over the past 50 trading days. XLF is one the most popular instruments in this sector, and it contains banking behemoths such as Citigroup (C) and Bank of America (BAC)....399 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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