This Wall Street-Heavy ETF Is Seeing Trading Madness: ETF Watch

(Bloomberg) -- Stock investors may have shrugged off bank earnings, but ETF buyers who hold the titans of Wall Street are clearly paying attention.

Investors traded almost $140 million worth of Invesco Ltd.’s PowerShares KBW Bank Portfolio, or KBWB, on Tuesday, marking the exchange-traded fund’s largest daily turnover in more than a year. And on Wednesday, over $107 million of shares traded, which is more than four times the fund’s daily average in the past year, according to Bloomberg data.

This Wall Street-Heavy ETF Is Seeing Trading Madness: ETF Watch

KBWB is more focused on big Wall Street banks than its rivals because of its market-cap weighting strategy, which more effectively represents the top-heavy nature of the industry, according to Dave Lutz, head of ETFs at JonesTrading Institutional Services. For example, the median weighted-market cap for KBWB is $45 billion, compared to $6.2 billion for State Street Corp.’s SPDR S&P Bank ETF, known by its ticker KBE.

The potential upside in financials based on the relatively strong earnings posted by big banks could be driving the activity in the fund, according to Kevin Miller, chief executive officer of Minnesota-based E-Valuator Funds.

“JPMorgan came out with good numbers and its stock went down,” he said. “I would see the financials as just being a real good opportunity for getting in after last week, and there’s the potential increase in their profitability capabilities going forward as the economy expands.”

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