Conservative Sector ETF Ideas For September
Over the last 20 Septembers, the S&P has posted an average performance of zero. If history repeats in September 2015, investors will want to take a conservative approach to sector exchange traded funds this month. The Utilities Select Sector SPDR ETF is usually the top performer among the nine sector SPDRs in the month of September. By Todd Shriber, ETF Professor September is here and that is great news for fans of American football, but financial market data indicate equity bulls would do well to curb what enthusiasm they have left after a trying August. For believers in seasonal trends, it must be noted that over the last 20 Septembers, the S&P has posted an average performance of zero. The benchmark U.S. equity index is traditionally flat in September over that period, according to Equity Clock data. That does not mean sector-level opportunities cease to exist in the ninth month. Rather, the opposite is true, but if history repeats in September 2015, investors will want to take a conservative approach to sector exchange traded funds this month. Utilities The Utilities Select Sector SPDR (NYSEARCA: XLU ) is usually the top performer among the nine sector SPDRs in the month of September, averaging a modest gain in the ninth month of the year, according to CXO Advisory . XLU is in the midst of what is supposed to be a seasonally strong period for the largest utilities ETF as the fund is usually the second-best of the nine SPDRs in August. Indeed, XLU lived up to that track record, but underscoring just how poorly stocks performed last month, XLU lost 4 percent. Only the Energy Select Sector SPDR ETF (NYSEARCA: XLE ) was better among the nine SPDRs. Consumer Staples According to CXO data, the Consumer Staples Select Sector SPDR ETF (NYSEARCA: XLP ) is usually the second-best of the nine SPDRs this month, though like the S&P 500, is usually about flat this month, reminding investors that sometimes less bad is good. However, before backing up the bus on XLP, investors should note that the largest staples ETF was usually the best of the sector SPDRs in August, but that historical data did not mean much as XLP tumbled 6.1 percent last month. Materials & Tech In terms of the worst of the nine SPDRs in September, that dubious honor goes to the Materials Select Sector SPDR ETF (NYSEARCA: XLB ) followed by the Technology Select Sector SPDR ETF (NYSEARCA: XLK ). This is where things get interesting and those things are a reminder that seasonal trading often requires the user to be nimble. Historical data, courtesy of CXO, indicate XLU is usually the best SPDR this month, but that is before it turns into October’s worst. Conversely, XLK is historically the second-worst SPDR in September before it becomes the best of the nine in October. Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.