Insights on the Global Financials

Notes from Italy: Economic Recovery and NPL Progress Improving Confidence

We recently traveled to Milan and met with representatives from Italy’s three largest banks. These banks have combined assets of ~€1,800 bln, loans of ~€960 bln, and market caps of ~€85 bln. We also recently traveled to the U.K. and had the opportunity to meet with the 4th and 5th largest Italian banks while there. Despite a challenging 2016 in terms of market returns, the stock prices of the banks we met on the trip to Italy have increased between ~15% and ~30% year-to-date, indicative of investors’ views that an Italian economic recovery is underway (real GDP expected to increase by at least 1.0% for the first time since 2010[1]). The Hamilton Capital Bank ETF (HBG) currently has ~3% exposure to Italian financials, while the Hamilton Capital Global Financials Yield ETF (HFY) has ~2% exposure. Read More»

Notes from the Field: Everything’s Peachy in Atlanta

A recent trip to Atlanta gave us a chance to meet with executives from several publicly traded banks headquartered in Georgia, as well as some of their commercial customers and a local land broker. Seven months after the election of an administration with ambitions of pro-growth policies and reforms that renewed investor interest in U.S. bank stocks, the trip presented a good opportunity to check in to see how things are looking on the ground. Read More»

Notes from the Field: At Home with the Challengers of U.K. Banking

During a recent trip to London, we had the opportunity to sit down with executives from six UK-based banks, including teams from two High Street banks and four from what are commonly referred to as “Challenger banks”.  In this note, we review our stance on U.K. banks, provide a brief breakdown of the market, and discuss our key takeaways from the trip. Read More»

Notes from the Field: U.S. Mid-Cap Bank Meetings in New York

We recently attended a U.S. financial services conference in New York City and had the opportunity to meet with executives from seven mid-cap banks. These meetings were of particular importance to us, as the Hamilton Capital Global Bank ETF (HBG) has ~46% of NAV invested in the U.S., with the majority of that in banks with less than US$50 bln in assets. Given the relatively low dividend yields of the sector, the Hamilton Capital Global Financials Yield ETF (HFY), which has a net underlying yield of ~4.8%, only has a ~5% allocation to U.S. banks. Read More»

JPM Investor Day: Capital Return, Tax Reform, and Interest Rates

As we have written in the past, in the Hamilton Capital Global Bank ETF (HBG), we generally prefer mid-cap U.S. banks over their larger peers. With respect to the Hamilton Capital Global Financials Yield ETF (HFY), our U.S. bank allocation is very small (~6%), because yields for the sector are among the lowest in global banking (although we expect them to rise in the next two years). Read More»

Event: Hamilton Capital Opens TSX, Celebrating the Launch of Hamilton Capital Global Financials Yield ETF (HFY;TSX)

On February 8, 2017, Hamilton Capital, and its partners, joined Dani Lipkin, Head, Business Development, Exchange Traded Funds, Closed-End Funds, and Structured Notes, TMX Group to open the market to launch Hamilton Capital Global Financials Yield ETF (HFY;TSX). HFY commenced trading on the Toronto Stock Exchange on February 7, 2017.

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U.S. Banks: Another Tough Quarter for Mega-Caps as All Four Experience Negative Q/Q EPS Growth (and Four-Year Near-Zero Growth Trend Persists)

On February 7th, 2017, we will be launching the Hamilton Capital Global Financials Yield ETF (HFY). It is the aspiration of HFY to generate “REIT-like yields, with positive rate sensitivity”.  Therefore, we anticipate that HFY would have close to zero exposure to the four mega-cap banks primarily while their yields are very low. There are nearly 400 global financials with yields in excess of 5%, and the average yield of these four banks is less than 2%, which is too low to merit inclusion in the fund (although we expect these yields to rise in 2017). As we have written in the past, given their low earnings growth profile, we do not own any in the Hamilton Capital Global Bank ETF (HBG). Read More»

Another U.S. Mid-Cap Bank Holding to be Acquired

Last night, it was announced that another Hamilton Capital Global Bank ETF (HGB) holding was being acquired, the second in 8 months. Along with greater EPS growth, lower regulatory risk, and higher interest rate sensitivity, this highlights one of the other reasons / themes why we prefer the U.S. mid-cap banks to their mega-cap peers: the potential for consolidation. Read More»

Are REITs Set to Underperform the Financials?

We are pleased to announce the launch of the Hamilton Capital Global Financials Yield ETF (HFY), which will begin trading on the TSX on Tuesday, February 7th. The objective of the ETF is to offer attractive distribution potential. Put differently, our aspiration is for the ETF to have “REIT-like yields, but with positive rate sensitivity”. Although REITs were recently separated from certain financial services indices (for example, U.S. financials index), we continue to consider REITs to be part of the “financial services” universe. As such, REITs are part of HFY’s investment universe and the ETF may often have exposure to these firms, both real estate and mortgage REITs. Read More»

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