ETF Strategies for Financial Reform

Congress has passed the financial regulation bill. Now what? President Obama is certain to sign it into law - he's stated his intention to do so throughout the debate and various iterations the bill took.

What this means for ETF investors is that it's time to think about what this could mean for the big banks. That's still an open question, but if you're at all concerned about any negative impact of such a  bill, there are a few ETFs out there that will minimize your exposure to Wall Street giants.

 SPDR KBW Regional Banking (NYSEArca: KRE) and iShares Dow Jones U.S. Regional Banks (NYSEArca: IAT): These would be a play on small regional banks, with the idea that these banks have been unjustifiably sold off with the larger financial institutions. To hedge your bets, you could make a long KRE/short XLF play.

First Trust NASDAQ ABA Community Bank (NASDAQ: QABA): This fund would give you exposure to even smaller banks than the regionals, some of which can be surprisingly large and cover big swaths of the country.

Regional and community banks may still have some bad loans on their books, but by and large, these institutions didn't engage in the type of high-risk behavior that brought Wall Street to its knees in 2008.

You can find a list of all financial ETFs using our ETF Analyzer and typing "financial" in the search.