As U.S. banking contagion worries ebb, some investors are hunting for shares of fundamentally strong regional lenders that were swept up in this month’s epic sell-off.
Investors sent a record net $236.2 million into the iShares Regional Bank ETF (IAT.P) over the last two weeks, after Silicon Valley Bank’s collapse earlier this month fueled concern about banking system stability and sparked a sector-wide rout. The ETF has slumped nearly 26% since March 8, when SVB’s troubles became known, while the S&P Regional Banks Select Industry Index (.SPSIRBK) is down around 23%.
Concerns over deposit flight are still swirling around some regional banks. Some fund managers, however, believe the sell-off has created bargains and are building positions in companies they think will pull through.