XLF: Why Fund Managers Loaded Up On Financial Stocks In Q2

Fund managers rotated out of tech and into financials in Q2 2026, despite XLF's middling year-to-date performance. Rising interest rates favored banks and insurers, while REITs and tech stocks faced net selling due to rate sensitivity and AI trade volatility. International financials, especially emerging market banks and FinTechs like Nu Holdings and Credicorp, saw strong fund inflows for their growth and valuation in Q2. I have a neutral view on financials overall for H2 2026, but like buying certain individual names that offer clearer opportunity.