ETF Portfolios: Is it time to invest in banks? Look at PJB

With President Obama at the helm it seems as though the light might be shining on the economic horizon. If you’re of this opinion then now might be a good time to invest some of your hard earned savings in the banking industry.

But what bank do you buy? Rather than selecting just one bank, how about hedging your bets by investing in many diverse banks from all over the country? An exchange traded fund (ETF) is a great way to do just that. By investing in the ETF PowerShares Dynamic Banking (PJB) you get shares of several different banks. PJB seeks to replicate the Dynamic Banking Intellidex index and invests at least 90% of assets in common stocks that comprise that index. Among their holdings in the PJB ETF are BancFirst Corporation(NASDAQ GS: BANF) BancFirst’s holding company, Capital Federal Financial(NASDAQ GS: CFFN) the holding company for Capitol Federal Savings Bank, and Northern Trust Corporation(NASDAQ GS: NTRS) Northern Trust Company’s holding company.

By purchasing shares of PJB through an ETF you’re actually letting a computing system select the stocks that are expected to perform most closely to the Dynamic Banking Intellidex. Using this computing system and the ETF the charge to you will only be 0.6%, whereas a traditional money manger would charge you several times that amount. For a look at the top 10 holdings for PJB see the below list; these companies make up 45% of their total holdings which includes about 30 banks.