XLF: STATE STREET(R) FINANCIAL SELECT SECTOR SPDR(R) ETF
ETF Education Report: STATE STREET(R) FINANCIAL SELECT SECTOR SPDR(R) ETF (XLF)
What this ETF is trying to do
The XLF ETF focuses on the financial sector. It holds many different companies that work in banking, payments, and insurance. This ETF is designed to give investors a way to own a group of financial companies all at once rather than buying each one individually.
What the numbers show
When looking at an ETF, it is important to know the difference between "price return" and "total return."
• Price Return: This measures only how much the share price changed.
• Total Return: This includes both the change in share price AND any cash payments (distributions) the ETF gave to investors.
For XLF, here is what the data shows:
• Year-to-Date (YTD): The price return is approximately 2.06%, while the total return is approximately 3.30%.
• One-Year: The price return was approximately 3.04%, while the total return was approximately 5.00%.
• Three-Year: The price return was approximately 64.80%, while the total return was approximately 72.59%.
To visualize the price change, the estimated price from roughly one year ago was $54.25. The current price is $55.90.
Top Holdings
The following are the top holdings in this ETF (note that this is a partial list):
• Berkshire Hathaway Inc Class B: 12.27%
• JPMorgan Chase & Co: 11.65%
• Visa Inc Class A: 8.00%
• Mastercard Inc Class A: 5.88%
• Bank of America Corp: 4.73%
Income and distribution explanation
Some investors look for ETFs that pay them cash regularly. This is called a "distribution yield." XLF has a distribution yield of approximately 1.80%. These payments usually happen quarterly, and there were 5 payments in the last 12 months. While these payments provide cash, they are not the same as total return.
NAV erosion explanation
"NAV erosion" is a term used to describe when the value of an ETF's underlying assets decreases significantly over time. It is important to remember that a falling share price does not always mean NAV erosion is happening.
For this ETF, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.
Pros
• The ETF shows a history of positive total returns over one, three, and five years.
• It has an income rating grade of "A."
Cons
• The distribution yield is relatively low compared to some other types of income-focused investments.
Beginner takeaway
XLF provides exposure to many large financial companies like JPMorgan Chase and Visa. When studying this ETF, remember that the total return is higher than the price return because it includes cash distributions. Always look at both numbers to see how much value an investment has actually created over time.
Top Holdings
Structured portfolio holdings supplied by the ETF data provider. These figures are not generated by the AI article.
| # | Holding | Ticker | Weight |
|---|---|---|---|
| 1 | BERKSHIRE HATHAWAY INC CLASS B | BRK-B | 12.27% |
| 2 | JPMORGAN CHASE & CO | JPM | 11.65% |
| 3 | VISA INC CLASS A | V | 8.00% |
| 4 | MASTERCARD INC CLASS A | MA | 5.88% |
| 5 | BANK OF AMERICA CORP | BAC | 4.73% |
| 6 | THE GOLDMAN SACHS GROUP INC | GS | 3.54% |
| 7 | WELLS FARGO & CO | WFC | 3.22% |
| 8 | MORGAN STANLEY | MS | 3.08% |
| 9 | CITIGROUP INC | C | 2.87% |
| 10 | CHARLES SCHWAB CORP | SCHW | 2.10% |