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Bank of America Earnings, Foreclosure Scandal to Impact ETFs
By ETF Channel Staff, Tuesday, October 19, 10:42 AM ET
Bank of America (NYSE:BAC) posted a wider third quarter loss today, though adjusted earnings beat expectations. The bank also announced yesterday it will resume foreclosure proceedings on some 100,000 homes in 23 states that require judicial approval. It had placed a moratorium on foreclosures after allegations that the foreclosure review process was not being handled thoroughly. It has maintained its moratorium in the 27 states not requiring judicial approval.
Bank of America services more loans than any other bank, and has been under intense scrutiny by investors since the start of the recent foreclosure scandal, in which banks may have purposely lost loan documents in order to mislead the public.
Several ETFs have a high level of exposure to Bank of America and the financial sector. Many have seen healthy gains this year, and may be adversely impacted by news about the emerging scandal.
The RevenueShares Financial Sector Fund (AMEX:RWW) allocates 10.9% of its assets to Bank of America. In addition to a hefty weighting to BAC, the fund also holds more than 9% of its assets in both Citigroup (NYSE:C) and JP Morgan (NYSE:JPM), likely to be impacted by any news at Bank of America.
Other ETFs with a large Bank of America position include the iShares Dow Jones U.S. Financial Services Index Fund (AMEX:IYG), with an allocation of nearly 9.8%, and the SPDR KBW Bank ETF (AMEX:KBE) with an allocation of over 10.6%.
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