This is how strong U.S. stocks have been this year: The worst performer among the nine sector SPDR ETFs is the Utilities Select Sector SPDR (NYSEArca: XLU) with a year-to-date gain of 14.4%.
That is not surprising as XLU is not only the highest-yielding SPDR, but also the one with lowest beta and lowest correlation to the S&P 500. The Technology Select Sector SPDR (NYSEArca: XLK) is the next worst “offender” with a year-to-date of 18%. [A Buffett Pop for Energy ETFs]
In further testament to the strength of the 2013 rally, five SPDRs are up more than 23% and three are up more than 30%. The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) and the Health Care Select Sector SPDR (NYSEArca: XLV) are tussling for top honors this year.
YTD SPDR Performances
Health care’s perch near the top does not come as a surprise. Dating back to 1989, the sector is the best of the 10 GICS sectors in the S&P 500 with an annualized total return of 11.51%, according to S&P Capital IQ data. Interestingly, health care barely nudges past energy for top honors among S&P 500 sectors since 1989. Interesting because XLV is inching closer to swiping the third spot from the Energy Select Sector SPDR (NYSEArca: XLE) among the largest sector ETFs. [Bronze Medal Race for Sector ETF Surpremacy]
As the chart below indicates, dividends have been a larger driver of the energy sector’s total returns than payouts have been with health care. Telecom and utilities are the sectors that benefit most from inclusion of dividends. Excluding dividends, technology is the best S&P 500 sector dating back to 1989, health care falls to second followed by discretionary, staples and energy.
Long-Term S&P 500 Sector Returns
Chart Courtesy: S&P Capital IQ. Click to enlarge.
Obviously, ETFs have not been trading in the U.S. since 1989 and the sector SPDRs did not debut until December 1998. That means 2013 marks the fifteenth full year in which there is data available for the nine SPDRs.
Since January 1999, five SPDRs have more than doubled and that is to be precise and exclude the Consumer Staples Select Sector SPDR (NYSEArca: XLP), which is up 99.2%, from that list.
Not surprisingly, the two worst SPDRs since the ETFs debuted are the Financial Select Sector SPDR (NYSEArca: XLF) and XLK, which are up 9.6% an 17.3%, since January 1999, respectively. [SPDRs Still Flourishing]
Perhaps XLK deserves a pass because the timing of its debut, in hindsight, looks dreadful. The ETF didn’t even get two of years of trading under its belt before the tech bubble burst. XLF would later suffer at the hands of housing/credit bubble.
The best SPDR dating back to January 1999 is, and the race is not even close, XLE
Nine SPDRs Since January 1999
