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ETFs facilitate exposure to banking sector

The recent run in bank share prices may well continue and exchange-traded funds are an optimal way for clients to gain exposure, according to Market Vectors.

Market Vectors Australia director, investments and portfolio strategy, Russel Chesler says investors can struggle to choose between bank equities and that ETFs can asssist with that.

“With historic dividend yields ranging from 6.4 per cent to 7.5 per cent, including franking credits, and with term deposits not yielding much over inflation, many retirees are choosing bank shares to supplement their income,” said Mr Chesler.

“Australian investors have a huge appetite for bank shares because they represent opportunities to earn relatively high yields and to reap healthy capital growth.

“Given bank shares represent a substantial portion of the traded value in the Australian share market, investors may consider this ETF as a core position in their investment portfolio,” Mr Chesler said.