The Failure of Financial ETFs
13 November 2009 at 2:07 pm by Gary Gordon
Not a lot of folks are talking about it… but financial ETFs are struggling. While the “dollar carry trade” has encouraged investors to push big time benchmarks to 52-week highs, the SPDR Select Financial Fund (XLF) is still -6.8% below its closing high from 1 month ago.
Consider the Dow Diamonds Trust (DIA), the S&P 500 SPDR Trust (SPY) and the Nasdaq 100 proxy, the Powershares QQQQ. Each finished the 11/12/09 week at new peaks or within spitting distance.
A similar pattern can be found worldwide. Here are the charts for Vanguard All-World ex U.S. (VEU) and Vanguard Emerging Markets (VWO).
Unfortunately for fans of financial stocks, SPDR Select Financial Fund (XLF) is showing a bit more trepidation. In fact, XLF may be the only sector that is still below a 50-day moving average.
Should we be concerned about the lone segment’s lack of conviction? Is the “correction” of 5%-7% for the broader benchmarks truly over?
Here are the 9 SPDR Select Sector Funds and their respective distances from new 52-week tops:
| U.S. Sector Funds: Percent From 52-Week High (11/13/09) | |||||
| % | |||||
| SPDR Select Consumer Staples | 0.0% | ||||
| SPDR Select Consumer Discretionary | 0.0% | ||||
| SPDR Select Technology | 0.0% | ||||
| SPDR Select Healthcare | 0.4% | ||||
| SPDR Select Industrials | 0.4% | ||||
| SPDR Select Materials | -1.6% | ||||
| SPDR Select Utilities | -2.5% | ||||
| SPDR Select Energy | -4.1% | ||||
| SPDR Select Financials | -6.8% | ||||
Indeed, the only genuine area of weakness exists with financial stocks. Were it not for a few choice words — credit crisis, toxic assets, TARP, Fannie, Freddie, AIG, GM, PPIP, residential and commercial real estate defaults, foreclosures, subprime and so forth — it might be easier to dismiss. But alas, it may be wise to keep an eye on this market anomaly.
If you’d like to learn more about ETF investing… then tune into “In the Money With Gary Gordon.” You can listen to the show “LIVE”, via podcast or on your iPod.
Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. The content does not represent investment advice, nor are the securities discussed suitable for every investor. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
Tags | "etf sector", "ets sectors", "financial sector etf", "sector etfs". "financial etfs"
