(XLF) Financial Sector Fund - Overview

The Financial Select Sector SPDR® Fund (ticker XLF) is an exchange-traded fund that tracks the S&P 500 Financials Index. By mandate it must allocate at least 95 % of its net assets to the securities that compose the index, which are classified under the Global Industry Classification Standard as financial services, insurance, banks, capital markets, mortgage REITs, and consumer finance. Because the fund’s holdings are concentrated in a single sector, it is designated as non-diversified.

As of the most recent data (January 2026), XLF holds roughly $37 billion in assets under management, carries an expense ratio of 0.12 %, and distributes a quarterly dividend yielding about 2.1 % annualized. The top five holdings-JPMorgan Chase, Bank of America, Berkshire Hathaway, Wells Fargo, and Citigroup-collectively represent roughly 30 % of the portfolio, reflecting the sector-weighting bias toward large-cap banks.

Key drivers of XLF’s performance are macro-economic variables that affect the financial sector: (1) the Federal Reserve’s policy rate, which influences net interest margins for banks; (2) credit-spread dynamics, which impact capital-market and consumer-finance profitability; and (3) the health of the U.S. housing market, which determines mortgage-REIT earnings. Recent trends show a 75-basis-point rise in the Fed Funds rate since mid-2023, compressing some banks’ margins but boosting net interest income for others, while mortgage-REIT yields have risen modestly as mortgage rates have stabilized.

For a deeper quantitative assessment of XLF’s risk-adjusted returns and sector exposure, you may want to explore the analytics available on ValueRay.