To The Moon

🌟🌟🌟This has been a great week for the US markets buoyed by cooler than expected inflation report and Big Banks' excellent Q4 24 earnings.  These results bolstered market confidence, signalling resilience in the financial sector despite macroeconomic uncertainties.

$Financial Select Sector SPDR Fund(XLF)$ XLF represents the best and strongest US  Financial Giants especially the Big Banks in just 1 ETF.  In fact XLF ETF is the largest ETF for the US Financial Sector with Assets Under Management of USD 50.16 billion.

The Top 10 holdings include Berkshire Hathaway, JPMorgan Chase, Visa Inc, Mastercard Inc, Bank of America, Wells Fargo, Goldman Sachs, American Express, Morgan Stanley, S&P Global and Citigroup.

The Top 10 holdings weightage is 54%.  Total number of holdings is 75.  The expense ratio is a low 0.09%, which is among the lowest against other competing ETFs.  Dividends are paid every 3 months.  The current dividend yield is 1.45%.  XLF goes ex dividend on March 24 2025.

Financial stocks surged on Wednesday with XLF climbing 2.6% as investors celebrated strong Q4 24 earnings from the US major banks.

$JPMorgan Chase(JPM)$  led the charge, reporting full year Net Income  of USD 58. 5 billion in 2024.  This is the highest in the history of American banking and can be attributed to better than expected revenue growth in its investment banking and trading divisions.

JPMorgan concluded the year with a strong quarter, generating income of USD 14.0 billion which is up 50% from previous year quarter.   Net revenue for Q4 24 was USD 43.7 billion, up 10%.  Net interest income was USD 23.5 billion, down 3%.  Non interest revenue was USD 20.3 billion, up 29% from previous year quarter. 

According to Chairman and CEO Jamie Dimon, each line of business posted solid results.     He said that the US economy has been resilient.  Unemployment remains relatively low and consumer spending stayed healthy, including during the holiday season.  Businesses are more optimistic about the economy and are encouraged by expectations for a more pro growth agenda.

JPMorgan is the largest US based bank and the 5th largest in the world with Assets Under Management of USD 3.9 trillion.   It also has a fortress like balance sheet with CET-1 ratio of 15.7%.    JPMorgan's share price is up 8% in the past 5 days and in 2024, it has jumped by 55%.

Wells Fargo $Wells Fargo(WFC)$  also beat analysts expectations.  It reported a Q4 24 Net Income of USD 5.1 billion or USD 1.43 per Diluted Share, bringing its Full Year 2024 Net Income of USD 19.7 billion or USD 5.37 per Diluted Share. 

According to CEO Charlie Scharf, Wells Fargo's solid performance for the quarter caps a year of significant progress for the bank.  Its Diluted Earnings per share increased 11% from previous year quarter.  Strong fee based revenue growth is up 15% from a year ago which largely offset the expected decline in net interest income.   There were  notable gains in its consumer banking division, reflecting robust loan growth and higher deposit balance. 

Wells Fargo is the 4th largest US bank and has a CET-1 ratio of 11.1%.  Wells Fargo's share price is up 10.7% in the past 5 days and in 2024,  it has skyrocketed by 65%.

Another outstanding performer this week was Goldman Sachs $Goldman Sachs(GS)$ 

It reported Net Revenue of USD 53.51 billion and Net Earnings of USD 14.28 billion for the year ended December 31 2024.  Net revenue was USD 13.87 and Net Earnings was USD 4.11 billion for Q4 24.  The increase in revenue was due to its trading desks delivering a robust quarter. 

Goldman Sachs reported Earnings Per Share of USD 11.95 which exceeded Analysts expectations.   Oppenheimer maintained its Outperform rating on Goldman Sachs and increased its price target to USD 687 from previous USD 639.

Goldman Sachs share price is up 11.9% in the past 5 days and in 2024, it has jumped by 66%.  Goldman Sachs is the 2nd largest investment bank in the world by revenue. 

These are just 3 of the Financial Institutions that reported this week.  The other 2 are Bank of America and Citibank Group which also reported  excellent earnings results. 

$Bank of America(BAC)$  is US 2nd largest bank.  It generated a net revenue of USD 25.3 billion which was 15% higher than the previous year quarter.  It also beats estimates of USD 25.1 billion.  It grew Net Interest Income by 3% to USD 14.4 billion, which also topped expectations. 

Bank of America received  a boost from investment banking and institutional trading.  Investment banking fees spiked 44% to USD 1.7 billion.  Its Global Markets business which includes institutional trading, saw revenue climbed 18% year over year to USD 4.8 billion. 

Bank of America's share price is up 3% in the past 5 days and has risen 46% in 2024.

With so many outstanding US banks to choose from, it is a difficult decision to decide which  banks  to invest in.  That is why I choose to invest in XLF as it gives me the access to all these excellent banks in just 1 ETF.  

XLF also offers me  great value for money.  At the last closing price of USD 50.23 it is a lot cheaper than investing in say JPMorgan which is USD 259.16 or Goldman Sachs which is USD 625.94.

Wall Street Analysts are bullish on XLF with a Buy rating, Average Target price of USD 57.63.  That is a upside potential of 14% according to Tipranks. 

With the incoming new US President, Donald Trump on January 20, I believe that XLF will do well in 2025 as he is very much pro business and would be cutting taxes.  Moreover declining interest rates could enhance economic activities and confidence, benefiting financial companies.

With XLF, I have the power of the best US financial institutions at a minimum investment cost.  That is the beauty of this awesome ETF.  Investing does not have to be complicated with XLF. 

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