ETF investors responded to ongoing speculation that the Federal Reserve is drawing closer to raising interest rates by embracing financial services ETFs in May. For example, the Financial Select Sector SPDR (NYSEArca: XLF), the largest financial services ETF, added nearly $545 million in new assets last month. Inflows to financial services ETFs, including XLF, arrived after professional investors shunned the sector in the first quarter. [Pros Ditched Bank ETFs too Soon]
The Health Care Select Sector SPDR (NYSEArca: XLV) added $590 million in May. XLF and XLV followed up those impressive May showings by adding $942.4 million and $927.7 million, respectively, in June. Overall, investors added almost $2.4 billion and nearly $2.8 billion to financial services and healthcare ETFs last month, according to State Street data. Conversely, rate-sensitive sector ETFs were out of style as utilities ETFs bled $771 million while real estate funds lost almost $500 million. [Rethinking Rate Sensitive ETFs]
Table Courtesy: SSgA
Tom Lydon’s clients owns shares of IWM, QQQ and SPY.