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%.
Top holdings include Berkshire Hathaway (NYSE: BRK.B) 10.4%, Wells Fargo & Co. (NYSE: WFC) 10.2%, JPMorgan Chase & Co (NYSE: JPM) 9.6%, Bank of America Corp. (NYSE: BAC) 6.9% and Citigroup (NYSE: C) 6.5%.
Sub-sector tilts include diversified banks 36.3%, multi-sector holdings 10.7%, asset management & custody banks 8.8%, regional banks 7.1%, investment banking & brokerage 6.8%, property & casualty insurance 6.5%, life & health insurance 6.5%, consumer finance 5.6%, multi-line insurance 4.8%, specialized finance 4.4%, insurance brokers 2.3% and thrifts & mortgage finance 0.2%.
The widely observed Financial Services Select Sector SPDR (NYSEArca: XLF) is seen as a broader version that encompasses both XLFS and XLRE sub-sectors. Market observers can still track the broader financial sector through XLF, which will remain unchanged, but now, investors can take more targeted exposure with the new GICS sector classifications when using a large cap sector rotation strategy.
Along with the two new sector ETF launches, State Street is lowering the fees on its whole Select Sector SPDR ETF suite to 0.14% from 0.15%.
“When we launched Sector SPDRs in 1998, our expense ratio was 0.65 percent. As more and more institutional and now individual investors have incorporated Sector SPDRs into their investment strategies, we have been able to drive our overall expenses down,” Dan Dolan, Director – Wealth Management Strategies, Select Sector SPDR Trust, said in the press release.
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Max Chen contributed to this article.