Buy The Financial Select Sector
What is XLF?
The Financial Select Sector SPDR provides investors with easy access to a basket of the largest publicly held U.S. financial service companies. As an exchange-traded-fund (ETF), it trades just like a stock. With an average daily volume greater than 35 million shares, XLF is among the top 10 most liquid listed ETFs in the U.S.
XLF provides investors with the ability to easily trade the financial services sector of the U.S. economy, which has historically been sensitive to interest rate fluctuations, macroeconomic factors, and political policy shifts. The past year (2020) has proven to be a challenging time for banks and insurers as the pandemic depressed economic activity; ultra-low central bank rates, meanwhile, have eaten into the profitability of lenders.
The XLF portfolio contains shares of 65 different companies, held on a capitalization-weighted basis, across segments, including commercial banking, consumer lending, insurance, and exchanges. The individual companies in the XLF portfolio include Berkshire Hathaway and JPMorgan and, as a group, account for more than 10% of the S&P 500 Index. Like many ETFs, XLF has a low expense ratio and liquid trading volume.
What is the price XLF?
At $28 per share, XLF has declined by roughly 7.5% year-to-date even after a double-digit rebound after the stock market bottomed during the spring of 2020.
Longer-term performance has been equally difficult with XLF underperforming the S&P 500 on a total return basis on a 1-, 3-, 5- and 10-year basis.
At 2.16%, the current yield on shares of XLF is attractive for income investors but can make short selling expensive.
How to buy XLF
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Here’s how fast it is to get started:
1. Go to Uphold.com and click sign up.
2. Enter your email address and personal details.
3. Click the link we send you and create a password
… and you’re off to the races!
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*U.S. stock trading is not available in the U.S., U.K., and certain other jurisdictions.
This article is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice, and before taking any action you should consult your own advisors. Note that assets such as equities present unique risks for investors.
This content is correct as of December 2020
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