All I want for Christmas is the banks

Can you believe it? The end of the year is around the corner with only 25 trading days before the end of 2013. Is a Christmas bonus now on the cards? 

With ANZ, BOQ, MQG, NAB, and WBC¹ all having gone ex-dividend in early November now may be the time to add the banks to your shopping list for a little extra Christmas cheer. 

Most of the banks pay dividends and commence processing their Dividend Reinvestment Plans (DRPs) in mid-December.  Anecdotal evidence suggests that approximately 50% of the banks are owned by retail investors who like to reinvest. Coupled with the fact this is typically a period of thin trading as investors wind down for the festive season, the reinvestment trades could likely bolster bank prices through to the end of the year.

The returns for the month of December for Australia's three big banks that pay dividends in December (ANZ, NAB, and WBC) are shown below for the past six years.   The data shows an average positive return in the lead up to the New Year.  The disparity between individual performances however reinforces the difficulty in deciding which bank to invest in.

The Market Vectors Australian Banks ETF (ASX code: MVB) is an efficient and effective way to invest in Australia’s seven banks in a single trade. MVB tracks the Market Vectors Australia Banks Index (MVMVBTRG), which caps any one bank’s weighting at 20%, thereby removing the large capitalisation biases found in traditional market indices and ensuring true diversification.  

Market Vectors Australian Banks ETF calculates distributions at the end of December (and quarterly) and is more cost effective than any other financial sector based ETF.

Being the only pure play Banks ETF in Australia, now may be the time to add Market Vectors Australian Banks ETF to your Christmas shopping list. 

¹ANZ (Australia and New Zealand Banking Group Ltd.);  BOQ (Bank of Queensland Ltd.); MQG (Macquarie Group Ltd.); NAB (National Australia Bank Ltd.); and WBC (Westpac Banking Corp.)