Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect regional banks to perform well because of their generally more conservative lending nature, the SPDR S&P Regional Banking ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The SPDR ETF's expense ratio -- its annual fee -- is a relatively low 0.35%.
This ETF has generated some mixed results, beating the world market over the past one and three years, but underperforming it over the past five. (That's not terribly surprising since the huge credit crisis happened during that period.) As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 13%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several regional banks turned in solid performances over the past year. Regions Financial
Other companies didn't do as well last year, but could see their fortunes change in the coming years. KeyCorp
The big picture
Demand for banking services isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
These are not the only intriguing bank stocks out there. Our banking analysts can introduce you to The Stocks Only the Smartest Investors Are Buying and let you in on some tips that Warren Buffett has used to rate stocks in this sector.