Financial Select Sector SPDR FundNYSE American: XLF

The IRS has rules about concentration levels in funds. As the Tech Select Sector SPDR rebalances, one of the big three—Apple, Microsoft, or Nvidia—could get demoted.

Previously an outperformer with a year-to-date gain of over 11%, the financial sector now finds itself at a critical juncture after giving back some of its gains. Just six trading days ago, the Financial Select Sector SPDR ETF NYSE: XLF made a new high but has since pulled back over 2%.

We have changed our rating on the Financial Select Sector SPDR® Fund ETF from BUY to HOLD. The XLF ETF has increased in price by over 20% in less than a year since our initial recommendation, making it overvalued, especially considering the decrease in dividends.

Looking for broad exposure to the Financials - Broad segment of the equity market? You should consider the Financial Select Sector SPDR ETF (XLF), a passively managed exchange traded fund launched on 12/16/1998.

The financial sector is a crucial part of the economy, but the Financial Select Sector SPDR Fund ETF has underperformed its peers. The XLF is a concentrated portfolio dominated by top holdings such as Berkshire Hathaway, JPMorgan, Visa, and Mastercard.

The GICS sector committee recently moved several major stocks in the Tech Sector to the Financial Sector. This raised questions about how true to its Sector XLF is now. We examine its holdings and compare them with VFH whose index holds several hundred more stocks. The banks and insurers held by XLF make up less than half of the value of the whole ETF. We discuss the other subsectors it holds and their vulnerability.

Technical analysis suggests financial stocks have room to gain.

Chris Kotowski, senior research analyst at Oppenheimer, joins 'The Exchange' to discuss Q4'23 bank earnings, how to position bank stocks moving forward, and more.

The stock market's resurgence into year-end has been a microcosm of this year. Let's just say that it has been a very bullish strong year for the markets.