Market cap analysis
Larger-cap stocks that are above $10 billion make up 87.3% of the Financial Select Sector SPDR Fund (XLF). These stocks fell 2.4% in 2015 and 2.6% during December 2015. In comparison, the broad-market based S&P 500 ETF (SPY) fell 0.8% during the past year. Smaller-capped stocks—those under $10 billion market capitalization—have underperformed large caps and have fallen 6.2% in 2015 and 6.1% in December.
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 Financial Select Sector SPDR Fund’s portfolio. These stocks fell 3.7% last year while small-cap banking stocks fell 2.6%. In comparison, large-cap diversified financial services stocks fell 9.7% in 2015 while small-cap diversified financial services stocks fell 10.7%.
The best performers in this subgroup YTD (or year-to-date) are E*Trade Financial (ETFC) and the NASDAQ (NDAQ). The two have returned 23.5% and 21.5%, respectively, during the year. Meanwhile, the worst performers, Navient Corporation (NAVI) and Franklin Resources (BEN) have fallen 47.5% and 33.6%, respectively, in 2015.