What’s an ETF?
Have you ever wondered what is actually in an ETF? Exchange traded fund, or ETF for short, is a fund that is publicly traded on the stock exchanges which gives investors the ability to buy a share of the fund’s investments, in exchange for an annual expense fee (expense ratio). This has its advantages over mutual funds as you can see the values fluctuate throughout the day, and can sell or buy shares whenever you want. The Financial Select SPDR ETF (NYSEARCA:XLF) is one example of an ETF that is traded quite frequently.
What is XLF?
The Financial Select SPDR ETF (XLF), which we will identify as XLF moving forward, currently is trading for $15.58 per share with an annual yield of 0.98%. XLF shares trade on the New York Stock Exchange and it is one ETF of many offered as SPDR Sector ETFs. For each share of XLF you buy, you subsequently are investing your $15.58 (based off of Friday’s closing price) into 81 different financial stocks it controls.
What’s In XLF?
The three largest holdings are in JPMorgan & Chase Co. (NYSE:JPM), Wells Fargo & Co. (NYSE:WFC), and Berkshire Hathaway ‘B’ (NYSE:BRK.B). Based on Friday’s close, XLF has invested 9.20% of its portfolio in shares of JPMorgan & Chase Co. (JPM). So for the $15.58 you invested into XLF with your one share purchase, you have invested $1.43 into JPMorgan’s stock. This can be calculated by taking the $15.58 share price for XLF, multiply it by the 9.20%, to get how much you are investing in XLF. So what else is in XLF? We already mentioned there is 81 different companies it currently holds stocks in, let’s break down the top 15 holdings by weight.
As you can see from the chart above, the company has at least 5% invested into names such as Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), Bank of America (NYSE:BAC), Berkshire Hathaway ‘B’ (BRK.B), Wells Fargo (WFC) and JPMorgan (JPM). The list goes on and on. One thing you can quickly pickup on is that the ETF gives you the advantage of instant diversification across an entire sector of stocks. We will elaborate more on the individual holdings in the next page.Page 1 | Page 2
Disclosure: No positions in XLF stocks.