Return of the ETFs: 3 Names That Could Keep Outperforming

Group 1: Investment Strategies - Investing in the broader S&P 500 index is generally safe and aligns with the average economic growth of the U.S., but it sacrifices higher growth potential due to diversification [1] - Focusing on the business cycle allows for low-risk setups while targeting industries that may outperform the S&P 500, making ETFs a potentially profitable choice [2] Group 2: ETF Performance - The SPDR S&P Regional Banking ETF (KRE) has outperformed the S&P 500 by over 6% in the past quarter, indicating strong future potential driven by expanding balance sheets and earnings per share (EPS) [5] - The Consumer Discretionary Select Sector SPDR Fund (XLY) has outperformed the S&P 500 by 2% over the past month, with expectations of increased consumer spending as tariff fears subside [9] - The Vanguard Small-Cap ETF (VB) has outperformed the S&P 500 by nearly 3% over the past month, suggesting a bullish momentum in the small-cap sector [12] Group 3: Economic Indicators - Looser capital requirements and leverage regulations are expected to benefit larger banks, while smaller banks may see significant growth in EPS due to their expanding balance sheets [5] - Consumer spending is anticipated to return to pre-tariff levels, which will likely lead to EPS expansion in the consumer discretionary sector [8] - If the Federal Reserve lowers interest rates, small-cap companies could benefit from reduced debt costs, enhancing their EPS potential [14]