Even after its recent tumble, Utilities SPDR (NYSEARCA:XLU) has a price-to-earnings ratio of 14.77, which is toward the higher end of the historical range for utilities stocks. To put that in perspective, the Technology SPDR (NYSEARCA:XLK) has a P/E of 12.98.
Financial Select Sector SPDR (NYSEARCA:XLF) A financial services ETF could not be left off this list, so the group’s largest fund was included. Not only is Financial Select Sector SPDR (NYSEARCA:XLF) the largest ETF tracking bank stocks by assets, it has also topped its rivals in 2012. To Financial Select Sector SPDR (NYSEARCA:XLF)’s credit, it has outpaced the Vanguard Financials (NYSEARCA:VFH) and the iShares Dow Jones US Financial (NYSEARCA:IYF), though all three have generated truly impressive returns.
These ETFs have been helped by Bank of America Corp (NYSE:BAC) almost doubling year-to-date and Citigroup Inc. (NYSE:C) surging more than 50 percent. In the case of Financial Select Sector SPDR (NYSEARCA:XLF), those two stocks combine for almost 12 percent of the fund’s weight.
American International Group, Inc. (NYSE:AIG), another Financial Select Sector SPDR (NYSEARCA:XLF) top-10 holding and another of the ETF’s most controversial constituents, has soared 53 percent this year as well. In other words, in a sector laden with controversial names, Financial Select Sector SPDR (NYSEARCA:XLF) is benefiting from the performances of the most notorious financial services firms. Perhaps it will not be on a level that is comparable to what has been seen this year, but a 2013 sequel is possible, particularly if Bank of America does get approval from the Federal Reserve to pay a dividend and repurchase shares.
First Trust Exchange Traded Fd VI (NASDAQ:TDIV) One might think the appearance of a new ETF on a list chock full of more established funds is odd, but the First Trust NASDAQ Technology Dividend Index Fund does merit consideration as one of the sector funds to consider for 2013 and the reasoning is quite simple.
Not only is technology the largest sector weight in the S&P 500, the sector is now the fastest-growing in terms of dividends. Assume for a moment that the worst case scenario, that being the fiscal cliff, is avoided. Investors will again embrace dividend stocks and part of theme is finding stocks with potential for stellar dividend growth. Enter cash-rich technology companies such as Microsoft Corporation (NASDAQ:MSFT), Intel Corporation (NASDAQ:INTC) and others.
Give TDIV some credit. The ETF debuted in mid-August and has accumulated more than $47.6 million in assets. It has also sharply outperformed Apple over the past 90 days. That stock is not yet a First Trust Exchange Traded Fd VI (NASDAQ:TDIV) holding, but it could be at a later date.
Flexshares Trust (NYSEARCA:GUNR) The FlexShares Morningstar Global Upstream Natural Resources Index ETF is one ETF that critics of the exchange-traded products industry need to carefully examine because the fund dispels some of the common misnomers about the ETF industry.
Flexshares Trust (NYSEARCA:GUNR) debuted in September 2011 and with more than $671 million in AUM today, the fund is clearly among the top ETFs to have debuted last year. Along those lines, GUNR is proof positive that new ETFs can be immediately successful and that successful new ETFs need not be issued by one of the three largest ETF sponsors.
Flexshares Trust (NYSEARCA:GUNR) also proves that a new sector ETF can enter a crowded arena and provide value to investors. Indeed, there are plenty of energy ETFs on the market today, there are plenty of materials funds and there plenty of funds such as GUNR, which combine the two sectors. With a year-to-date gain of almost nine percent, Flexshares Trust (NYSEARCA:GUNR) has outpaced popular energy ETFs such as the Energy Select Sector SPDR (NYSEARCA:XLE) and, at the very least, as performed in line with its energy/materials combination counterparts.
This article was originally written by The ETF Professor, and posted on Benzinga.
