As 2012 draws to a close we're trying to wrap up this year and look forward to 2013. We've already taken a look back at some of the year's big losers. Looking forward, we're expecting the economy to continue to improve, provided of course that Congress and President Obama reach a deal to fix the Fiscal Cliff. We expect some sectors to perform better than others though, and as such, we've put together a list of our top ETF picks for 2013.
SPDR KBW Regional Banking ETF (KRE)
The banking sector had a good year 2012 as it continues to recover from the financial crisis. Big banks were up sharply this year as earnings have started to recover as loan-loss reserves built up during the recession were released. Regional banks lagged their larger peers, but we believe they have more upside going into 2013. The nation's largest banks will have to comply with new capital requirements under the Basel III regime, as well as new regulations to be placed on systemically important too-big-to-fail institutions under the Dodd Frank Financial Reform Act. There are also potential legal issues connected to shoddy mortgage underwriting in the years leading up to the crisis and manipulation of LIBOR during the crisis facing the bigger banks. Smaller regional banks should avoid much of that scrutiny and additional regulation, leaving them free to continue to grow in 2013.