As for the factors that could see this race grow even tighter, some integrated oil stocks have been disappointments this year relative to independent exploration and production firms. Increased pressure on refining margins could weigh on the bottom lines of the integrateds, in turn pressuring XLE.
On the other hand, XLV could be derailed in its quest for title of third-largest sector ETF if investors begin believing health care is a richly valued sector on par with staples and utilities. [Playing Defense Isn’t Cheap]
As it is, XLV’s P/E ratio of nearly 17 is higher than the almost 15 sported by XLE.
Interesting tidbit: Over the past 14 years, there is only one month of the year, January, in which XLV ranks as the best or second-best of the nine SPDRs, but it ranks as the worst SPDR in two months. XLE ranks as the best or second-best SPDR in three months, but it is not found among the two worst SPDRs in any of the 12 months, according to CXO Advisory.
Health Care Select Sector SPDR
