With each turn of the calendar comes the opportunity for investors to exploit different seasonal trends, task made easier with exchange traded funds.
Of course, seasonal trends are most efficacious when supported by positive price action and other key indicators. With that in mind, September brings the arrival of ETF opportunities at the sector level. Importantly, the September sector ETF trade, like its August counterpart, has historically favored conservative bets.
Translation: Since 1999, the first full year of trading for the nine sector SPDR ETFs issued by State Street Global Advisors, the second-largest U.S. ETF issuer, the Utilities Select Sector SPDR (NYSEArca: XLU) has been the best performer of the nine in the month of September, according to CXO Advisory.
Thanks to a 21.5% decline by 10-year Treasury yields this year, XLU has spent significant time in 2014 as the best-performing sector SPDR ETF, a spot the fund recently ceded to the Health Care Select Sector SPDR (NYSEArca: XLV). [Utilities ETFs for Volatile Markets]
XLU, the largest utilities ETF, is up nearly 16% year-to-date and has an average September gain of less than 1%, according to CXO data.
On a historical basis, September’s second-best SPDR is another conservative, low-beta offering: The Consumer Staples Select Sector SPDR (NYSEArca: XLP). XLU and XLP ranking first and second among the nine SPDRs in September is a flip-flop of sorts from August when XLP is usually the SPDR leader followed by XLU. [Conservative ETFs for August]
XLU and XLP are indeed coming off strong August showings with gains of 4.5% and 3.8%, respectively. Last month, XLP hauled in over $815 million in new assets, but XLU lost $730.3 million.
Including September, XLP, the largest consumer staples ETF, ranks as one of the top-two SPDRs in three months of the year. The same is true of XLU, though it is worth noting that ETF moves to the bottom two SPDRs in October, according to CXO data.
Speaking of bottom dwellers, on a historical basis, the two worst SPDRs in September are the Materials Select Sector SPDR (NYSEArca: XLB) and the Technology Select Sector SPDR (NYSEArca: XLK), both of which have a penchant for falling in the ninth month of the year.
Consumer Staples Select Sector SPDR
