All sectors are not created equal. Investors who seek to adapt their investment portfolio to prevailing market trends may target specific areas of market through sector-related exchange traded funds.
On the upcoming webcast, How Well Do Your Know Your Sectors?, State Street Global Advisor’s David Mazza, V.P. and Head of Research, Research Strategist Jared Rowley and Research Strategist Matthew Bartolini discuss overweight and underweight sector strategies for the coming months, along with some new sector ETF ideas.
For instance, in a low-interest rate environment, the Utilities Select Sector SPDR (NYSEArca: XLU) has been a popular play as the utilities sector produces an attractive yield, compared to the low 2.07% yields on benchmark 10-year Treasuries. XLU has a 3.61% 12-month yield. [Utilities ETFs Light Up In Erratic Q3]
XLU has also been outperforming the broader S&P 500 index as market observers anticipate the Federal Reserve will push off on its first interest rate hike in almost a decade. Over the past three months, XLU rose 4.4%, whereas the S&P 500 dipped 3.9%.
Furthermore, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) and Consumer Staples Select SPDR (NYSEArca: XLP) have been outperforming this year, rising 10.2% and 4.8%, respectively, while the S&P 500 Index was only up 0.4% year-to-date.
State Street Global Advisors also recently added its first S&P 500 sector-ETFs in 17 years. Earlier this month, State Street expanded its suite of Select SPDR ETFs to include the Financial services Select Sector SPDR Fund (NYSEArca: XLFS) and the Real Estate Select Sector SPDR Fund (NYSEArca: XLRE). [Sector SPDRs Adds First New Sectors In 17 Years]
XLRE will try to reflect the performance of the Real Estate Select Sector Index, which include real estate management and development and REITs, excluding mortgage REITs. The underlying index has a dividend yield of 3.36%.
XLFS will try to reflect the performance of the Financial Services Select Sector Index, which tracks areas like diversified financial services, insurance, banks, capital markets, consumer finance, thrifts, mortgage finance and mortgage REITs. The underling index has a dividend yield of 1.9%.
Financial advisors who are interested in learning more about can register for the Thursday, October 22 webcast here.