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Best SPDR ETFs for Rising Rates: Gold, Homebuilders, Regional Banks

The start of a rate hiking cycle does not spell the end of the housing market. In fact, it will push more people into homes and homebuilder stocks higher.

The start of a rate hiking cycle does not spell the end of the housing market. In fact, it will push more people into homes and homebuilder stocks higher, said David Mazza, head of SPDR ETF and SSGA funds research. 'Anyone who was on the sidelines can now have some more confidence of saying that rates have moved and we know the path and pace is going to be slow so let’s go out there and make that purchase,' said Mazza. Mazza said the new clarity over the path of interest rates will not just help homebuilder stocks, but also second derivative plays like furniture and home improvement retailers. The SPDR S&P Homebuilders ETF (XHB), which includes both builder and housing related names, is up 1% year-to-date. The SPDR S&P Regional Banking ETF (KRE) has risen over 4% so far this year and popped on the heels of the Federal Reserve interest rate announcement this week. Mazza said the fund has seen a surge in inflows in recent weeks as investors expect banks to become more profitable in this new higher rate environment. 'We are seeing this recovery in the U.S. move from Wall Street to Main Street,' said Mazza. 'That helps consumers and all those regional banks which are doing more local-related lending, whether its autos or home loans, will benefit as well.'

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