Broad Financial Fund Investment Holds Big Names

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

The Financial Select Sector SPDR ETF (XLF), the fourth exchange-traded fund (ETF) in our series on select sector ETFs, focuses on one of the larger sections of the S&P 500, with the financial sector amounting to about 16% of that index. XLF provides broad exposure to the U.S. financial services sector and seeks investment results that match the performance of the Financial Select Sector Index.

View the current price, volume, performance and top 10 holdings of XLF at ETFU.com.

The Financial Select Sector Index includes the following industries, among others: insurance, consumer banks, diversified financial services and real estate management and development.

The financial sector is one area of the market that has not returned to its “precrisis highs” as spectacularly as others have. XLF is down 1.53% year to date, but it has risen nearly 10% since hitting its 2015 low in late August, as shown in the chart below. The current dividend yield is small, sitting at less than two percent, but so far it has risen slightly for all three quarters of 2015. XLF’s expense ratio is 0.14%, and it has over $18 billion in assets managed.

WETF 20151106 5

This fund’s top 10 holdings comprise about 48% of its total assets. Given the amount of assets XLF manages and its sizable role in the S&P 500, this number might seem rather low. Yet, nearly all of these 10 positions are well known names in the financial world. Warren Buffett’s Berkshire Hathaway (BRK-B) takes the top spot, with 8.56% of assets, closely followed by Wells Fargo (WFC), 8.48%. Other major holdings include financial services company JPMorgan, 8.10%; Bank of America Corporation (BAC), 5.32%; and banking and financial services giant Citigroup (C), 5.39%.

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If a stake in the large, but slowly recovering, financial sector seems appealing to you, you may want to take a look at Financial Select Sector SPDR ETF (XLF). In this column next week, I’ll have another sector highlighted for your consideration.

Remember to look for the current price, volume, performance and top 10 holdings of XLF at ETFU.com.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a technology-sector ETF. I also invite you to comment in the space provided below.

 

 

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Investment trend expert Chris Versace discusses when investors can tell if it's time to invest in a new exchange-traded fund, using food-centered investments as examples.

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