Because the small & medium commercial bank segment is quite large, with more than 200 banks listed in the Russell 2000 index, our theme of only 18 constituents focusses on stability with
- low drawdown (largest continuous price drop over 2017)
- low to medium volatility
- and medium market cap
Commercial banking relies essentially on the traditional activity of managing deposits and lending to businesses and individuals. Deposit levels and demand for loans are both determined by regional economic growth in their trading area, which in turn impacts cash flows
To track the trend of US small to medium commercial banking, the performance of our selection (22.5 % Jan-17/Jan-18) proves to be fairly representative of the whole segment (20.5% over the same 12 months) and closely correlated over time