ETFriday: Banks and Homebuilders Print 234+ Basis Points While Korea Tops for Five Weeks

This Week's Setup

Korea holds the top Pixie Rank for the fifth consecutive week, now pricing at 17.8× earnings with a 124 basis-point spread to Treasuries, while homebuilders and regional banks offer the widest yield spreads of the year at 234 and 369 basis points despite mid-teens drawdowns.

Fear & Greed registers 67, a backdrop that typically pulls capital toward growth names, yet every ticker in the top 8 prints double-digit earnings yields and drawdowns deep enough to matter.

The S&P 500 CAPE sits at 38.9, signaling stretched valuations in the mega-cap index while these sector and country exposures trade at half that multiple with built-in margin for error.

Quick Scan

The 8 Names

1. iShares MSCI South Korea ETF (EWY)

3y annualized return: 35.00% | Life annualized return: 7.58% | 52w drawdown: -14.1%

EWY delivers a 5.6% earnings yield, 124 basis points above Treasuries, while the five-week streak at Pixie Rank 1 reflects a durable valuation edge in a market where the S&P 500 CAPE is 2.2× higher. South Korea's DRAM sector revenue hit $1 billion as tech demand accelerates, and the country's equity market overtook the UK to become the eighth largest globally.

The 14.1% drawdown sits in moderate dip territory, not a full reset, and the 1-year trend of 0.4% annualized growth signals sideways price action even as the market climbed. Three-year annualized returns of 35% created a high base for future gains.

Zacks coverage highlights South Korea's climb past the UK in market capitalization, with ETF inflows tracking the shift as investors reallocate from stagnant European exposures to Asia's tech manufacturing hubs.

2. Freedom 100 Emerging Markets ETF (FRDM)

3y annualized return: 29.14% | Life annualized return: 15.27% | 52w drawdown: -10.2%

FRDM prices at 16.4× earnings with a 6.1% earnings yield, 170 basis points above Treasuries, while the 10.2% drawdown keeps it in moderate dip range without the full capitulation that creates multi-year entry points. The fund's 15.3% annualized life return since inception reflects consistent execution in a category where most emerging-market funds underperform.

The 1-year trend of 0.2% annualized growth shows price stagnation despite the 29% three-year annualized return, a mismatch that suggests recent buyers paid elevated multiples for a sector that consolidated gains. The 10-year earnings yield spread of 170 basis points is wide, but not the 300+ basis points seen in crisis periods.

Zacks and 24/7 Wall St. coverage emphasizes the need to pick emerging-market funds carefully in 2026, with FRDM's governance screens and exclusion of autocratic regimes positioning it as a differentiated choice in a crowded category.

3. State Street SPDR S&P Kensho Clean Power ETF (CNRG)

3y annualized return: 4.35% | Life annualized return: 18.37% | 52w drawdown: -13.9%

CNRG's 4.4% earnings yield sits just 5 basis points above Treasuries at a 22.5× multiple, a tight spread that reflects investor willingness to pay for renewable energy exposure as Iran war concerns drive a global shift toward energy independence. The fund posted a 79.3% one-year total return, reversing three years of single-digit annualized performance.

The 13.9% drawdown and 0.5% 10-year yield spread offer no margin of safety if growth expectations reset, and the 4.35% three-year annualized return ranks last among the top 8 tickers this week. Clean power theses depend on policy tailwinds that can reverse faster than fundamentals.

Zacks identified Iran war disruption as the catalyst for a renewable energy boom, with oil supply shocks accelerating government and corporate commitments to clean power infrastructure.

4. State Street SPDR S&P Homebuilders ETF (XHB)

3y annualized return: 17.31% | Life annualized return: 13.54% | 52w drawdown: -16.3%

XHB trades at 14.9× earnings with a 6.7% earnings yield, 234 basis points above Treasuries, the widest spread in the top 8 after the bank ETFs. The 16.3% drawdown sits in strong entry territory, and the fund's 13.2% annualized 10-year return demonstrates sector resilience through multiple rate cycles.

The 1-year total return of 5.4% and trend growth of 0.1% annualized show price compression even as the setup improves, and D.R. Horton's Q1 divergence from Pulte and NVR flagged uneven demand across builders. Spring selling season remains the thesis, but it is not a certainty.

MarketBeat noted D.R. Horton's earnings outperformance while Pulte and NVR reported sales declines, a split that suggests builder-specific execution gaps rather than uniform sector strength.

5. State Street SPDR S&P Regional Banking ETF (KRE)

3y annualized return: 11.59% | Life annualized return: 8.55% | 52w drawdown: -14.1%

KRE delivers an 8.1% earnings yield at 12.4× earnings, 369 basis points above Treasuries, the second-widest spread in the top 8 and a signal that regional bank stress is priced in without a crisis materializing. PNC is positioning for its best year on record, and the 14.1% drawdown sits in moderate dip range with room for mean reversion if credit metrics stabilize.

The 1-year trend of 0.1% annualized growth and 7.9% 10-year annualized return rank below long-term equity averages, and the sector's reliance on net interest margin creates exposure to any yield curve flattening. Regional banks remain levered to commercial real estate portfolios that have not fully marked to market.

Barron's asked if banks are signaling a recession, calling them "the most important stocks to watch now," a framing that reflects macro uncertainty even as earnings cleared April without incident.