By Todd Shriber & Tom Lydon

Financial services stocks and exchange traded funds have been lagging the broader market this year. That much is highlighted by a 7.5% gain for the Financial Select Sector SPDR (NYSEArca: XLF) and a 6.3% gain for the iShares U.S. Financials ETF (NYSEArca: IYF).

But as they dithered for much of the earlier part of 2014, financial services ETFs are starting to impress. Over the past month, four of the top-10 performing non-leveraged ETFs are financial services funds and that group is led by the iShares U.S. Broker-Dealers ETF (NYSEArca: IAI).

After enduring a summer swoon at the hands of lethargic trading activity, IAI has come roaring back. Over the past month, the fund is up nearly 5.1%, a performance topped by only three other non-leveraged ETFs. That while trading volumes continue to dwindle, prompting concern from some market observers about the health of the bull market. Trading has been continually slowing down since the sharp uptick after the financial crisis in 2009. Last year, daily average U.S. stock trading volume was down 37%.

Despite its trials and tribulations earlier this year, which were magnified because it was one of 2013′s best-performing financial services ETFs, IAI entered Tuesday trading less than 0.6% below its 52-week high and it looks like more upside could be on the way.

“One of the most recent sectors to step forth and grab the leadership mantle, speaking of warts, has been the broker/dealers. Despite the cyclical (or secular) decline in equity volume and the concern over the lack of bond supply, the stocks of broker/dealers have been exceptionally strong of late. Last Friday, as the S&P 500 closed down 0.6%, the NYSE ARCA Broker/Dealer Index (XBD) was up 0.6%. For the week, the XBD was up over 4%, breaking out to a 6-year high in the process,” according to J. Lyons Fund Management.

The full article can be found by clicking this link.

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