ETF Trends
ETF Trends

It has happened. The Health Care Select Sector SPDR (NYSEArca: XLV) has usurped the Energy Select Sector SPDR (NYSEArca: XLE) for the title of third-largest U.S. sector ETF.

In early November, ETF Trends called attention to the scenario, noting on Nov. 4 that XLE was home to about $8.4 billion in assets under management compared to $7.9 billion for XLV. [Bronze Medal Race for Sector ETF Supremacy]

Both ETFs grew over the course of November, but XLV grew faster. As of Nov. 27, XLE had $8.56 billion in AUM compared to $8.82 billion for XLV, according to State Street data.

XLV has been outpacing XLE in terms of inflows all year and investors have been rewarded for their faith in the health care fund. Prior to moving past XLE for third place among sector ETFs in terms of size, XLV nudged past the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) to wrest the crown of 2013’s top-performing SPDR. XLV is up 40.4% this year compared to a 39.6% gain for XLY.

On the other hand, XLE is up an S&P 500-lagging 22.7%, a performance that means the largest equity-based energy ETF is the third-worst of the nine sector SPDRs this year.

Both XLV and XLE are heavy on Dow components. In the case of XLE, the ETF allocates 30% of its weight to Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX). XLV allocates about 29% of its weight to Johnson & Johnson (NYSE: JNJ), Pfizer and Merck (NYSE: MRK).

Of the 21 Dow stocks that are up at least 20% this year, those three XLV holdings are in that group, but neither Exxon nor Chevron is. Johnson & Johnson and Pfizer are also among the 16 Dow components that are up at least 30% in 2013.

Interestingly, XLE’s fall from the third spot does not mean it is now the fourth-largest sector ETF. That title goes to the Industrial Select Sector SPDR (NYSEArca: XLI), which had $8.57 billion in assets as of Nov. 27. That could be the result of investors pouring cash into cyclical ETFs in acknowledgment of seasonal trends that favor those ETFs. [Industrial ETFs: November Strong]

On that note, XLE ranks as the second-best SPDR to own in the month of December behind the Material Select Sector SPDR (NYSEArca: XLB). With $16.3 billion in AUM, the Financial Select Sector SPDR (NYSEArca: XLF) is by far the largest U.S. sector ETF.

Health Care Select Sector SPDR