S&P 500 ETFs That Exclude Weak Sectors

The equities market is a dynamic ecosystem with various segments moving to their own tune. Since various sectors may shine or dull in varying conditions, investors may consider ex-sector exchange traded funds to limit exposure to areas of weakness and focus on areas of strength.

For instance, healthcare and financials are two of the worst performing sectors in the S&P 500 of 2016, with the S&P 500 Health Care Index down 1.1% and S&P 500 Financials Index down 0.6% year-to-date, compared to the S&P 500’s 5.6% gain.

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Alternatively, investors could have utilized the S&P 500 Ex-Health Care ETF (NYSEArca: SPXV) and S&P 500 Ex-Financial ETF (NYSEArca: SPXN) to remove their exposure to the underperforming sectors and participate in the broad stock market moves. By excluding the underperforming sectors, SPXV increased 7.2% and SXPN rose 3.5% year-to-date.

Like their names imply, SPXV excludes health care exposure and SPXN excludes financial companies. However, potential investors should be aware that since the funds purposely exclude exposure to some of the largest S&P 500 market sectors, the ETFs portfolios allocations will overweight other large market segments in their place.