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Looking for broad exposure to the Financials - Broad segment of the equity market? You should consider the Financial Select Sector SPDR ETF (XLF), a passively managed exchange traded fund launched on 12/16/1998.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $53.01 billion, making it the largest ETF attempting to match the performance of the Financials - Broad segment of the equity market. XLF seeks to match the performance of the Financial Select Sector Index before fees and expenses.
The Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.38%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Berkshire Hathaway Inc Cl B (BRK.B) accounts for about 11.96% of total assets, followed by Jpmorgan Chase + Co (JPM) and Visa Inc Class A Shares (V).
The top 10 holdings account for about 55.16% of total assets under management.
Performance and Risk
Year-to-date, the Financial Select Sector SPDR ETF has gained about 3.29% so far, and was up about 25.30% over the last 12 months (as of 03/05/2025). XLF has traded between $39.59 and $52.19 in this past 52-week period.
The ETF has a beta of 1.05 and standard deviation of 18.21% for the trailing three-year period, making it a medium risk choice in the space. With about 76 holdings, it effectively diversifies company-specific risk.