{"id":40882583,"date":"2021-10-08T11:29:56","date_gmt":"2021-10-08T05:59:56","guid":{"rendered":"https:\/\/stockviz.biz\/index.php\/?p=40882583"},"modified":"2021-10-08T11:30:13","modified_gmt":"2021-10-08T06:00:13","slug":"fun-with-spdr-sector-etfs","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2021\/10\/08\/fun-with-spdr-sector-etfs\/","title":{"rendered":"Fun with SPDR Sector ETFs"},"content":{"rendered":"\n

State Street Global Advisors (SSGA) is known for its monster S&P 500 SPY ETF. With roughly $390 billion in AUM, SPY is one of the largest ETFs<\/a> out there. Apart from SPY, they are also known for their SPDR “Spider” sector ETFs.<\/p>\n\n\n\n

SYMBOL<\/td>FUND<\/td>LAUNCH_YEAR<\/td><\/tr>
XLB<\/td>Materials Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLE<\/td>Energy Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLV<\/td>Health Care Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLI<\/td>Industrial Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLY<\/td>Consumer Discretionary Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLP<\/td>Consumer Staples Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLF<\/td>Financial Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLU<\/td>Utilities Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLK<\/td>Technology Select Sector SPDR Fund<\/td>1998<\/td><\/tr>
XLRE<\/td>Real Estate Select Sector SPDR Fund<\/td>2015<\/td><\/tr>
XLC<\/td>Communication Services Select Sector SPDR Fund<\/td>2018<\/td><\/tr><\/tbody><\/table>
Sector ETFs<\/figcaption><\/figure>\n\n\n\n

These ETFs allow investors to take a concentrated bet on a specific sector and are often used as a benchmark for professionals who specialize in those sectors.<\/p>\n\n\n\n

Markets go through cycles where some sectors do well and some don’t. Some sectors are extremely volatile and some barely move.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Cross-correlations are all over the place. <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Given unstable cross-correlations and volatility, a na\u00efve use of optimizers is a bad idea. For example, if you use these as inputs to generate an “efficient” portfolio, the weights wary widely from year to year.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Consumer Staples (XLP) ends up gobbling up most of the allocation, followed by Utilities (XLU.) The performance of such a portfolio depends on what you are looking for.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n
\"\"<\/figure>\n\n\n\n

The efficient portfolio, given its large exposure to staples and utilities, has experienced lower drawdowns than both equity-weighted and S&P 500. This shows up in their Sharpe Ratios.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

SPY remains the King when it comes to returns. <\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

State Street Global Advisors (SSGA) is known for its monster S&P 500 SPY ETF. With roughly $390 billion in AUM, SPY is one of the largest ETFs out there. Apart from SPY, they are also known for their SPDR “Spider” sector ETFs. SYMBOL FUND LAUNCH_YEAR XLB Materials Select Sector SPDR Fund 1998 XLE Energy Select … <\/p>\n","protected":false},"author":2,"featured_media":2106273,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471],"tags":[31],"class_list":["post-40882583","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-insight","tag-etf","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/40882583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=40882583"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/40882583\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media\/2106273"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=40882583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=40882583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=40882583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}