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Analyzing XLF’s Structure: What Investors Need to Know

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About XLF

Launched in December 1998, the Financial Select Sector SPDR ETF (XLF) is a passively managed ETF designed to track the performances of large-cap (large capitalization) stocks in different financial industries.

XLF is a liquid financial ETF that aims to provide investment results that match with the price and yield performance of the S&P Financial Select Sector Index. It’s a cap-weighted fund comprising 90 companies, with its top 10 holdings making up about 49% of its total assets.

XLF’s expense ratio is low at 0.15%. It has a market capitalization of ~$18.4 billion as of November 16, making it the largest ETF in the United States after the S&P 500 SPDR ETF (SPY).

XLF includes securities of companies from the following industries:

  • diversified financial services
  • insurance
  • banks
  • capital markets
  • REITs
  • consumer finance
  • thrifts and mortgage finance
  • real estate management and development

The top five holdings of XLF include large-cap stocks such as JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), and Berkshire Hathaway (BRK).

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Investment strategy

XLF employs a replication strategy to track the index. This means that it invests in all the securities present in the index with nearly the same weights as those in the index.

Read on to the next article for a study of XLF’s top holdings.

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