Financials ETFs 2024 Gains Unmarred by JPM Stumble

XLF is up 7.5% this year despite a 5% decline in America’s biggest bank on Friday.

sumit
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Senior ETF Analyst
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Reviewed by: etf.com Staff
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Edited by: Ron Day

Financials are in the middle of the pack in terms of sector performance this year as investors weigh the competing forces of economic strength and balance sheet concerns.

The $38 billion Financial Select Sector SPDR Fund (XLF) is up 7.5% so far in 2024, a tad lower than the S&P 500’s 8.4% gain. 

Last year, XLF rose less than half as much as the broader index—12% versus 26%—amid concerns about regional banks and recession risks. 

This year, those worries haven’t been as prominent, but they still linger in the background.

While the overnight collapse of regional banks holding large amounts of uninsured deposits isn’t something that’s kept investors up at night lately, investors are grappling with the downturn of the commercial real estate market and what it means for lenders. 

On the other hand, high interest rates are boosting the income that banks generate from their core lending businesses. America’s largest bank, JPMorgan Chase & Co., reported net interest income of $23.1 billion for the first quarter on Friday, up 11% from a year ago. 

JPMorgan Shares Fall

While that wasn’t enough to appease investors, who sent shares of the bank down more than 5%, it reinforces the strong growth expected for the financial sector this year.

Earnings for the financials sector as a whole are expected to grow 11.4% in 2024, according to FactSet. That’s the fourth-highest growth rate of all sectors and slightly higher than the 10.9% growth anticipated for the S&P 500.

JPMorgan makes up 10% of XLF, while banks in general make up a quarter of the ETF. The stock has similar weightings in other financials-focused exchange-traded funds, like the iShares U.S. Financials ETF (IYF), the Invesco KBW Bank ETF (KBWB) and the Vanguard Financials ETF (VFH)

For a full list of which ETFs hold JPMorgan and how much, check out our stock finder tool.

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.