Scalper1 News
The replication of the broader U.S. market – the S&P 500 index – may be surging lately on Fed-induced optimism, but on the year-to-date frame it is still a laggard (as of October 15, 2015), having slid about 1.6%. Relentless global growth worries, be it over China, Europe, Japan or the emerging market block, and occasional issues in some specific corners of the domestic market hit the index hard this year. Even if the market rebounds in the final quarter of the year on hopes of persistent inflows of cheap dollar from the Fed, cheaper valuation and the seasonal tailwind of the all-important holiday season, the odds are not out of the way. After all, the S&P 500 index is made up of large-cap stocks which are largely tied to the global perspective. This is where the idea of the Ex-Industry S&P 500 ETFs launched by ProShares comes from. As of now, ProShares has four ETFs, namely the ProShares S&P 500 Ex-Financial ETF (NYSEARCA: SPXN ), the ProShares S&P 500 Ex-Health Care ETF (NYSEARCA: SPXV ), the ProShares S&P 500 Ex-Technology ETF (NYSEARCA: SPXT ) and the ProShares S&P 500 Ex-Energy ETF (NYSEARCA: SPXE ). As the names suggest, all these ETFs provide exposure to the companies of the S&P 500, with the exception of those companies included in the financial, healthcare, technology and energy sectors, respectively. How Do These Fit in a Portfolio? Notably, Financials, Medical, Technology and Energy account for about 20.7%, 13.7%, 20.6% and 4.1% of the S&P 500 index, respectively. So, if a particular sector is underperforming at a given period of time, investors can easily chuck that out from the broader S&P 500 index by investing in that ex-sector ETF. What could be a better example than the energy sector, which has been a pain for the last one and a half year in the marketplace, and is still not showing any definite sign of a recovery anytime soon? In such a situation, an ex-energy S&P 500 ETF – SPXE – could an intriguing pick. The technique is equally gainful even at the time of short-selling. If a sector is outperforming the broader market, investors can easily short-sell that particular ex-industry ETF and earn smart gains. The aforementioned sectors outperformed/underperformed the broader market index this year and in previous years as well by a wide margin. The chart below can be used to understand the trend: ETFs YTD Return 1-Year Return 5-Year Return Financial Select Sector SPDR ETF (NYSEARCA: XLF ) -5.34% 5% 60.3% Energy Select Sector SPDR ETF (NYSEARCA: XLE ) -12.7% -16.4% 16.6% Technology Select Sector SPDR ETF (NYSEARCA: XLK ) 1.3% 11.2% 73.8% Health Care Select Sector SPDR ETF (NYSEARCA: XLV ) 1.1% 13% 121.4% SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) -1.6% 7.3% 71% Moreover, the issuer noted that investors might have enough sector exposure from the other holdings, and so, could be intrigued by an ex-sector ETF. Below, we highlight the concerned ETFs in detail so that investors can get a fair idea of which ex-sector ETF can emerge as a game changer and when. As far as competition goes, the newly launched funds should receive their share of success ahead, given that their underlying idea is novel. SPY in Focus This most popular ETF with $131 billion of assets charges 9 bps in fees. IT (20.6%), Financials (16.1%), Healthcare (14.4%), Consumer Discretionary (13%) and Industrials (10.2%) get doubt-digit exposure in it. Energy has a relatively low exposure of 7.4% in the fund. SPXN in Focus This new 441-stock fund charges 27 bps in fees and has amassed about $4.1 million of assets, having debuted in late September. IT (24%), Healthcare (18.3%), Consumer Discretionary (15.5%), Industrials (11.9%) and Consumer Staples (11.6%) are the top sectors with double-digit weight. The product has a P/E ratio of 23.59 times. Given the low interest rate environment and the potential pressure on the financial companies’ net interest margin, some investors might choose to pick this fund at the current level. SPXV in Focus This 446-stock fund also has $4 million in assets. Here, IT (23.6%), Financials (19.6%), Consumer Discretionary (15.2%), Industrials (11.7%) and Consumer Staples (11.4%) get doubt-digit exposure. The product has a P/E ratio of 20.50 times. Occasional sell-offs in healthcare stocks on overvaluation and pricing issues can be opportune times for this fund. SPXT in Focus This 428-stock fund has a P/E of 22.10 times. Financials (21.5%), Healthcare (19.7%), Consumer Discretionary (16.6%), Industrials (12.8%) and Consumer Staples (12.5%) get doubt-digit exposure in the fund. While the technology sector saw great momentum lately, this high-growth sector normally succumb to a slowdown if global growth concerns flare up or a flight-to-safety trend sets up. SPXT can be an answer to these sector-specific tough times. SPXE in Focus This 462-stock ETF has a P/E of 22.01 times. IT (21.6%), Financials (18%), Healthcare (16.4%), Consumer Discretionary (13.9%) and Industrials (10.7%) get doubt-digit exposure in it. This should be the most-eyed fund now, given the relentless energy price slump. Original Post Scalper1 News
Scalper1 News