Featuring a Behemoth Financial Sector Fund

Jim Woods

An exchange-traded fund (ETF) in the financial arena that is worth highlighting is the Financial Select Sector SPDR ETF (XLF), which tracks a market-capitalization-weighted index of S&P 500 financial stocks.

As a result, in contrast to two previously featured funds — KBE and KRE — XLF concentrates on the large U.S. banks and steers clear of small-cap financial institutions. With $24.94 billion in total assets and daily trading volume nearing $1.4 billion, XLF is a behemoth that also is massively liquid.

In the past year, XLF alone accounted for more than half of all inflows that flowed into financial ETFs. The fund’s valuation has increased by nearly 45% over the past year. With the expected upcoming interest rate hikes from the Fed, financial experts at Barron’s anticipate that large banks have much to gain.

Another attraction for this fund is that it has a very active trading pit for options. Since December 2016, XLF has been buying a lot of puts to set up a more defensive stance. This helps to limit downward risk, in case unfavorable regulations are passed against the large banks.

XLF charges a low fee for its services, with an expense ratio of just 0.14%. On top of that, it also carries a distribution yield of 2.47% and pays a quarterly distribution. The fund’s one-year return is 34.92%, handily beating out the S&P 500’s one-year return of 17.45%.

XLF holds 63 of the largest financial institutions in its portfolio. Its top five holdings are JPMorgan Chase & Co (JPM), 10.76%; Berkshire Hathaway Inc B (BRK.B), 10.67%; Wells Fargo & Co (WFC), 8.75%; Bank of America Corporation (BAC), 8.26%; and Citigroup Inc. (C), 5.71%.

Exclusive  How My GO Statistic Predicted a Rebound

If you believe in the strength of the largest U.S banks, I encourage you to research Financial Select Sector SPDR ETF (XLF) as a possible addition to your portfolio.

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

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE


img
previous article

Almost 2,000 people already have voted for their favorite libertarian financial guru in the just-released survey sponsored by FreedomFest and Newsmax magazine. Economist Dr. Mark Skousen invites you to take part.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

LEARN MORE HERE

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

LEARN MORE HERE

Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details

LEARN MORE HERE

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE