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Select Sector SPDR Fund - Financial (XLF) |
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WIKI ANALYSIS
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This article describes an exchange traded fund that tracks an index, commodity, currency, or varied basket of securites. View articles referencing this fund. |
The Financial Select Sector SPDR Fund (NYSE:XLF) is an Exchange Traded Fund (ETF) that seeks to provide investment results that correspond to the price and yield performance of the Financial Select Sector of the S&P 500 Index. The Index includes a broad range of financial service firms including banks, brokerage houses, insurance and other diversified financial holding companies.
ETFs utilize a passive investment approach to invest in a portfolio of stocks that seek to replicate the underlying index, in this case the underlying index is the Financial Select Sector S&P 500 Index.
Fund Characteristics
- Fund Sponsor: State Street Global Advisors
- Inception Date: December, 1998
- Ticker: XLF
- Expense ratio: 0.21%
Top 10 Holdings (56.6% of total holdings)[1]
Current as of 7/19/2010
| Company | Index Weight |
| J P Morgan Chase (JPM) | 9.85% |
| Bank of America (BAC) | 8.91% |
| Wells Fargo (WFC) | 8.69% |
| Berkshire Hathaway (BRK) | 8.11% |
| Citigroup (C) | 5.60% |
| Goldman Sachs Group (GS) | 4.78% |
| American Express Company (AXP) | 3.16% |
| U.S. Bancorp (USB) | 2.81% |
| Morgan Stanley (MS) | 2.20% |
| Bank of New York Mellon Corporation (BK) | 1.98% |
Holdings by Industry[2]
| Industry | Index Weight |
| Diversified Financial Services | 28.3% |
| Insurance | 22.7% |
| Commercial Banks | 19.8% |
| Capital Markets | 16.4% |
| Real Estate Investment Trusts (REITs) | 7.5% |
| Consumer Finance | 4.7% |
| Thrifts & Mortgage Finance | 0.4% |
| Real Estate Management and Development | 0.2% |
Other ETFs in this family include:
- XLY: Consumer Discretionary SPDR
- XLP: Consumer Staples SPDR
- XLE: Energy SPDR
- XLV: Health Care SPDR
- XLI: Industrials SPDR
- XLB: Materials SPDR
- XLK: Technology SPDR
- XLU: Utilities SPDR
Investment Strategies
Sector investing is popular as various sectors of the economy may rise and fall in response to different economic factors. Some sectors will be counter-cyclical to other sectors.
Leveraged ETFs and Inverse ETFs
ETFs have become so popular that new ones are coming to market rather frequently. The latest version includes “leveraged ETFs” and “inverse ETFs.”
A leveraged ETF seeks to match some multiple of the underlying index. For example, PowerShares QQQ Trust (NASDAQ: QQQ) is an ETF that seeks daily investment results that correspond to the daily performance of the NASDAQ-100 Index. ProShares Ultra QQQ (NYSE: QLD) seeks to double the performance of the QQQ.
An inverse ETF seeks to match the performance of an index, but in the inverse direction. This is normally accomplished by short-selling either the index or the underlying assets. For example, ProShares UltraShort QQQ (NYSE: QID) seeks to double the performance of the NASDAQ-100 Index in the inverse direction. If the NASDAQ-100 is up 5% the ProShares UltraShort QQQ should be down by 10%.
References
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