Why Regional Bank Stocks Could Outperform Larger Banks in 2020
The KRE, an exchange-traded fund tied to the SPDR S&P Regional Banking Index, saw a roughly 24.5% gain in 2019, certainly no slouch of a performance. But the ETF failed to beat out the S&P 500, which posted more than a 28% return in 2019, or The KBW Index, a benchmark index of 24 of the largest banks stocks in the country, which generated a 30% return.
The KBW and KRE do share some of the same holdings, particularly the largest of regional bank stocks. But none of those large regionals could keep up with the performances of the largest players. Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM), and Citigroup (NYSE: C) all posted massive returns of 40% or higher, with Citigroup just shy of a 50% return. Although the impact of coronavirus and the Federal Reserve's recent interest rate cut has certainly dampened the outlook for most bank stocks this year, I think regional banks are in a better position to weather the storm.
Image source: Getty Images.
Source Fool.com
