Equities
State Street Sector ETFs
State Street offers a wide range of UCITS sector ETFs covering World, US and Europe exposures. With more than $300 billion in sector ETF AUM, State Street is a global leader in sector investing.
Implementing sector investing Harnessing the power of sector investing through ETFs
Investing in sectors can align portfolios with broader market trends, giving exposure to specific factors and styles.
Sectors are particularly well suited to target certain economic variables and, when accessed through ETFs, investors can implement macroeconomic views simply and cost-effectively.1
- Sectors offer a selective exposure with opportunities to potentially benefit from significant return dispersion
- Investing in sectors can provide a better means of capturing thematic trends than individual stocks
- ETFs are attractive tools for implementing economic and broader market views
State Street Investment Management AUM 2
Managing client assets
Managing sector ETFs
State Street’s Sector ETF Momentum Map is a powerful tool to see how sectors are trending relative to US, EMEA, world benchmarks and other sectors.
Getting active with sectors
Sector Pulse
Quarterly Trends and Outook
Rebecca Chesworth - Senior Equities Strategist, State Street Investment.
Our team reviews sector performance over the past quarter and explores which sectors will be worth watching over the following quarter.
The basics of sector investing
Selective market exposure
Sectors allow targeted exposure to capture opportunities in market (be it sentiment, macro factors, themes, style). Across a fund range there is also the ability to play different parts of the business cycle in different regions, e.g. US vs. Europe.
Dispersion between sector returns
Dispersion of returns is a defining characteristic of sector investing. As different sectors have different drivers, their returns will diverge over a given period. According to S&P, the dispersion between sector returns accounts for roughly half of the dispersion between stock returns. This implies that half of the value added from picking stocks could be achieved with selecting the right sectors.
Risk management
Diversification of risk3 Sector investment offers a lower concentration risk than individual stocks and helps avoid idiosyncratic risk associated with individual stocks.
Varied correlations between sectors Each sector has a different correlation with the overall market. Taking advantage of these differences could reduce risk in a portfolio.
Idea implementation
Because sectors comprise companies with the same economic activities, there are often style characteristics in common. This knowledge can be utilised to implement an investment view, particularly related to macroeconomic factors.
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