Market cap analysis
Large-cap stocks above $10 billion make up 87.3% of the Financial Select Sector SPDR Fund (XLF). These stocks have lost 4.7% YTD (year-to-date) and have lost 5.0% during the week ended December 11. In comparison, the broad-market S&P 500 ETF (SPY) lost 3.5% during the same period.
Smaller-capped stocks, those under $10 billion market capitalization, have underperformed large-cap stocks both year-to-date and last week. They have generated negative returns of 6.7% year-to-date and 6.4% last week. The underperformance of small caps relative to larger companies during the year hints at the vulnerability in the broader market. The sense is that investors choose to stay with large caps as they are safer bets amid uncertain global conditions.
Market cap analysis of subgroups
Large-cap banking stocks make up 47% of the XLF portfolio. These stocks lost 6.5% last week while small-cap banking stocks lost 9.1%. While large-cap banking stocks within the ETF have lost 5.5% YTD, small-cap banking stocks have lost 4.0%. Meanwhile, large-cap diversified financials lost a whopping 12.6% last week and small caps lost 12.6% as well.
Last week, the worst performers among the diversified financial services stocks were Affiliated Managers Group (AMG), Franklin Resources (BEN), Legg Mason (LM), and BlackRock (BLK). They have generated negative returns of 130.0%, 12.1%, 10.6%, and 10.5%, respectively, last week. Meanwhile, Navient (NAVI) was the only stock within the subgroup to have gained during the week.