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ETF finances were hit hard by fears that the collapse of Silicon Valley Bank and Signature Bank would reverberate throughout the banking system. However, some of the largest funds will receive reinforcements next week that could offset their losses. There will be big changes in the financial sector next week as long-planned changes to the GICS classification system come into effect on Monday. According to a March 2 change brief by BMO strategist Brian Belsky, the biggest names moving into the financial industry are Visa, Mastercard and PayPal. The changes will affect many passive sector index-tracking funds, especially those using the MSCI and S&P Dow Jones indices. This includes many of the Vanguard and State Street funds, as well as two major ETFs for the financial industry: the Vanguard Financials Index Fund ETF (VFH) and the SPDR Fund Financial Select Sector (XLF ). ). This change could come at a good time for ETF investors. While the collapse of Silicon Valley Bank rocked the entire stock market, payment company stocks fared much better than financial sector funds. Visa and Mastercard each lost less than 2% between March 8, when SVB announced an attempt to raise more capital, and March 14. Meanwhile, the Vanguard ETF and SPDR lost about 8% each. PayPal also outperformed, but to a lesser extent than credit card stocks. And as concerns about banks spread, Wall Street appears to still have confidence in payment stocks. According to Refinitiv, Mastercard, Visa and PayPal have buy ratings from most Wall Street analysts. The change could be particularly significant for market-cap-weighted funds, as Mastercard, Visa and Paypal combined will account for more than 10% of the financial sector, according to BMO. The changes to the GICS were first announced in March 2022 and are not a response to recent problems in the banking sector. — Michael Bloom of CNBC
Credit: www.cnbc.com /
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