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Should You Invest in the Financial Select Sector SPDR ETF (XLF)?
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If you're interested in broad exposure to the Financials - Broad segment of the equity market, look no further than the Financial Select Sector SPDR ETF (XLF - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $32.49 billion, making it the largest ETF attempting to match the performance of the Financials - Broad segment of the equity market. XLF seeks to match the performance of the Financial Select Sector Index before fees and expenses.
The Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.74%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Berkshire Hathaway Inc Cl B (BRK.B - Free Report) accounts for about 13.63% of total assets, followed by Jpmorgan Chase + Co (JPM - Free Report) and Visa Inc Class A Shares (V - Free Report) .
The top 10 holdings account for about 54.62% of total assets under management.
Performance and Risk
Year-to-date, the Financial Select Sector SPDR ETF return is roughly 9.77% so far, and is up about 11.93% over the last 12 months (as of 12/21/2023). XLF has traded between $30.98 and $37.57 in this past 52-week period.
The ETF has a beta of 1.08 and standard deviation of 20.15% for the trailing three-year period, making it a medium risk choice in the space. With about 75 holdings, it effectively diversifies company-specific risk.
Alternatives
Financial Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLF is an outstanding option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Financials ETF (IYF - Free Report) tracks Dow Jones U.S. Financials Index and the Vanguard Financials ETF (VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index. IShares U.S. Financials ETF has $2.01 billion in assets, Vanguard Financials ETF has $8.94 billion. IYF has an expense ratio of 0.40% and VFH charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the Financial Select Sector SPDR ETF (XLF)?
If you're interested in broad exposure to the Financials - Broad segment of the equity market, look no further than the Financial Select Sector SPDR ETF (XLF - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $32.49 billion, making it the largest ETF attempting to match the performance of the Financials - Broad segment of the equity market. XLF seeks to match the performance of the Financial Select Sector Index before fees and expenses.
The Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.74%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Berkshire Hathaway Inc Cl B (BRK.B - Free Report) accounts for about 13.63% of total assets, followed by Jpmorgan Chase + Co (JPM - Free Report) and Visa Inc Class A Shares (V - Free Report) .
The top 10 holdings account for about 54.62% of total assets under management.
Performance and Risk
Year-to-date, the Financial Select Sector SPDR ETF return is roughly 9.77% so far, and is up about 11.93% over the last 12 months (as of 12/21/2023). XLF has traded between $30.98 and $37.57 in this past 52-week period.
The ETF has a beta of 1.08 and standard deviation of 20.15% for the trailing three-year period, making it a medium risk choice in the space. With about 75 holdings, it effectively diversifies company-specific risk.
Alternatives
Financial Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLF is an outstanding option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Financials ETF (IYF - Free Report) tracks Dow Jones U.S. Financials Index and the Vanguard Financials ETF (VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index. IShares U.S. Financials ETF has $2.01 billion in assets, Vanguard Financials ETF has $8.94 billion. IYF has an expense ratio of 0.40% and VFH charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.