NEW YORK (TheStreet) -- Bank stocks have made a strong comeback in 2012 and financial ETFs are riding on the sector's coattails, with some funds experiencing strong inflows in recent weeks.
Investors seeking an easy exposure to a diversified group of bank stocks and who want to trade in and out of shares quickly as markets switch from "risk on" to "risk off" clearly find these ETFs appealing.
Yet, the rally has been concentrated in a handful of bank stocks rather than in a diversified basket.As KBW analyst Fred Cannon wrote in a note Tuesday, large-cap banks have outperformed the sector, with the KBW Bank Index gaining 26% year to date compared to the S&P Banks Select Industry Index, up 22.3%, with both topping the overall S&P Financial Select Sector Index (IXM) performance, which is up 20.96%. Bank of America (BAC) has led the rally in large-caps with its gain of 72%. So funds that have a large weighting to the stock have undoubtedly surged the most, explaining the divergence in performance between different financial ETFs.
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