XLF - XLF: How Exposed Is It To Inflation And Fluctuating Rates?
2024-01-31 12:05:50 ET
Summary
- The GICS sector committee recently moved several major stocks in the Tech Sector to the Financial Sector. This raised questions about how true to its Sector XLF is now.
- We examine its holdings and compare them with VFH whose index holds several hundred more stocks.
- The banks and insurers held by XLF make up less than half of the value of the whole ETF. We discuss the other subsectors it holds and their vulnerability.
- But keep in mind, sentiment may prove stronger than numbers if high profile banks or insurers run into trouble.
As those of you who follow my writings have probably noticed by now, I'm not a fan of the GICS sector definitions. I have pointed out in previous articles how the sector ETFs that track the Technology sector actually omit many of the biggest and most significant technology stocks, including Amazon ( AMZN ), which the GICS sector definitions placed in the Consumer Discretionary sector, and Meta ( META ) and Alphabet ( GOOG ) ( GOOGL ) which it put into the Communications Services Sector.
The most recent changes that the committee that established the GICS sector definitions made to the definition of the Technology Sector in March of 2023 moved quite a few stocks that had been Technology stocks, most notably Visa ( V ), Mastercard ( MA ), and PayPal ( PYPL ) into the Financial sector. You can read about this change in detail in my previous article Tech Sector Investors Beware: The MSCI Tech Sector Is Losing Some Of Its Strongest Stocks ....
XLF: How Exposed Is It To Inflation And Fluctuating Rates?