The funds most exposed to a new banking crisis

The start of 2016 has been a dismal one for investors. The chart below shows how the major developed world indices have performed year to date. At their worst they were down between 10% and 20% (click to enlarge).

While the sell-off was broad the latest down-leg was sparked by concerns over the banking sector (particularly in Europe) and the real possibility of another financial crisis. As I pointed out in my last weekly newsletter the catalyst for the sell-off was the central bank of Sweden moving its main interest rate on reserve deposits deeper into negative territory. Or in other words it would now cost banks money to place deposits with the Swedish central bank. Such a phenomena has many economists in a twist because their guide books don't allow for this eventuality.