Investment Ideas

SPDR Sector ETFs

Sector Compass

Sector Picks

Sector Compass Q4 2019

Our Sector Compass provides investors with an overview of recent sector performance and flows, and also features our Sectors Picks for the month ahead.

To read the full document, download the Sector Compass (PDF)

Sector Compass update - November 2019

This monthly document for sector investors provides the latest information on proprietary investor behaviour data, trends & performance and popular index metrics.

To read the full article, download the Sector Compass update (PDF)

Getting Active with Sectors

Harness the Power of Sector ETFs

What’s the role of sector indices in risk, pricing and active returns? S&P DJI’s Tim Edwards joins Rebecca Chesworth of SPDR ETFs to explore how and why some investors are getting active with sectors.

Filmed: 6 June 2019

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Around half of variation in stock returns can be attributed to sector trends.

Tim Edwards, S&P Dow Jones Indices, Sector Effects in the S&P 500®, March 2019.

The Basics of Sector Investing

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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 risk¹ 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.

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.²

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

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Experience

23 Yrs

Track record in managing indexed fixed income sector strategies ³

Assets managed

$170 BN

Amount in Sector strategies ³

Countries covered

40

Number of countries ³

More Information

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Fund information

View our SPDR fund range

¹ Diversification does not ensure a profit or guarantee against loss.
² Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
³ Source: State Street Global Advisors, as at 31 May 2019.

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Important Risk Information:

SPDR ETF is the exchange traded funds ("ETF") platform of State Street Global Advisors and is comprised of funds that have been authorised by European regulatory authorities as open-ended UCITS investment companies. SPDR ETFs may not be available or suitable for you.

ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns.

Changes in exchange rates may have an adverse effect on the value, price or income of an investment. Further, there is no guarantee an ETF will achieve its investment objective.

SHARES IN THE FUNDS OF THE SPDR® ETF SICAV, SSGA SPDR ETFS EUROPE I AND SSGA SPDR ETFS EUROPE II PLC MAY NOT BE AVAILABLE FOR OR SUITABLE FOR YOU. THE VIEWS EXPRESSED IN THIS SITE DO NOT CONSTITUTE INVESTMENT ADVICE. INDEPENDENT ADVICE SHOULD BE SOUGHT IN CASES OF DOUBT. NEITHER THE INFORMATION NOR ANY OPINION CONTAINED ON THIS SITE CONSTITUTES A SOLICITATION OR OFFER TO BUY OR SELL SHARES OF THE FUNDS OR ANY OTHER FINANCIAL INSTRUMENT.

Standard & Poor's®, S&P® and SPDR® are registered trademarks of Standard & Poor's Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation's financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.

SPDR ETFs may be offered and sold only in those jurisdictions where authorised, in compliance with applicable regulations.

Information related to Mexico

This information does not constitute and is not intended to constitute marketing or an offer of securities and accordingly should not be construed as such. The Funds referenced herein have not been, and will not be, registered under the Mexican Securities Market Law (Ley del Mercado de Valores) and may not be publicly offered or sold in the United Mexican States. Disclosure documentation related to any of the aforementioned Funds may not be distributed publicly in Mexico and shares of the Funds may not be traded in Mexico.

You should obtain and read a prospectus and KIID relating to the SPDR ETFs prior to investing. Further information and the prospectus/KIID describing the characteristics, costs and risks of SPDR ETFs are available for residents of countries where SPDR ETFs are authorised for sale on the SPDRs website and from your local SSGA office.