Conservative Sector ETF Ideas for June

With June almost here, it is worth noting that U.S. stocks are coming off a surprisingly good showing in May.

Surprising because May starts the worst six-month period in which to own stocks, but despite all the talk, “sell in May and go away” was not a pervasive theme this year. June could be different as the six month of the year is typically weak for stocks.

June ranks as the second-worst month for the Dow Jones Industrial Average and third-worst month for the S&P 500, according to the Stock Trader’s Almanac. However, in mid-term election years of which 2014 is, June is the worst month for both the Dow and S&P.

The arrival of June does not mean investors need to throw in the towel altogether on stocks. As is the case in every month, some sectors and the corresponding exchange traded funds shine brighter than others in June. Given June’s reputation as being a tough month for stocks, it is not surprising that two conservative sectors often prove durable. [Sector ETF Ideas for May]

Of the nine sector SPDR ETFs from State Street Global Advisors, the Utilities Select Sector SPDR (NYSEArca: XLU) is historically the best performer in June, according to CXO Advisory. In a testament to June’s reputation for equity market weakness, XLU is the best SPDR with an average June gain of just a few tenths of a percent.

Utilities have been this year’s top-performing S&P 500 sector, but June marks the start of an interesting stretch for XLU. The largest utilities ETF goes from being the best SPDR, on a historical basis, in June to the worst of the nine in July to being number two in August and back to being the best in September, according to CXO. [The Quiet Decline of Utilities ETFs]