Computerized Investing > June 18, 2011

Select Sector SPDRs

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Select Sector SPDRs are a useful investment for individuals looking to round out their portfolio. These SPDR exchange-traded funds (ETFs) divide the S&P 500 into nine sectors (consumer discretionary, consumer staples, energy, financial, health care, industrial, materials, technology and utilities) allowing investors to quickly and easily gain exposure to certain sectors that their portfolio may be lacking.

It is worth taking a look at several areas of the website before deciding whether sector ETFs are right for you. Select Sector SPDR provides a summary page for each sector when you click on the sector link at the top of the page. For each individual sector ETF, the holdings, distributions and performance for the latest one-month through 10-year periods are presented. In addition, fact sheets for each fund are offered in PDF format.

A monthly research report for each sector exchange-traded fund is also available. The report provides a wealth of valuable information, including the fund basics such as assets, volume, expense ratio, performance and beta. Fundamental data such as sales per share, earnings per share, net margin and dividends per share are all presented in the report. Furthermore, there are several valuation and risk metrics provided, including the ALTAR score and its calculation. A prospectus format is also available in PDF format.

In addition to data on each exchange-traded fund, Select Sector SPDRs offers several helpful tools. The SPDR Map of the Market shows a heat map of each sector’s performance over a designated time period. The Correlation Tracker shows the correlation between any stocks or ETFs that you enter. You may also construct charts of up to four securities to vizualize the correlations in their returns. A watchlist is offered where you can effortlessly track investments in which you are interested.

In addition to rounding out your personal portfolio, this website is particularly beneficial when performing top-down analysis. Top-down analysis involves starting with the market as a whole and choosing strong asset classes, then identifying sectors within those classes and industries within those sectors that you believe have the best chance of outperforming. Eventually, you will get down to the company level and choose individual securities. Since these ETFs track specific sectors, the data on the Select Sector SPDRs website can provide insight on which ones are outperforming. There is an ETF learning center and several videos to help you get started.


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