When I was looking to get deeper into the banking sector a couple of months back, but didn’t want to take on all of the risk that came with the individual names, I bought an ETF as a proxy for the sector.  The ETF is XLF.

In my opinion, this is the best way to buy the banking sector with minimal risk.  Banks could still go bust.  The “too big to fail” mantra may begin falling on deaf ears if new capital is needed and unavailable in the open market.  Buying individual names such as Citi or Bank of America could be dicey.  The XLF tracks the good and the bad and you will profit as the sector moves up.

The XLF is up 73% in the past three months.

Bob

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