Daily ETF Watch: New Sector SPDRs Ignored

In October of last year, State Street Global Advisors rolled out two new additions to its Select Sector SPDR family. The move was made to reflect changes to the classification system, the Global Industry Classification Standard (GICS), used by S&P Dow Jones Indices, which broke the financial sector out into two separate sectors—financial services and real estate.

However, despite the fact that they are the first additions to the multibillion-dollar Select Sector SPDRs family of ETFs since the original nine ETFs were launched in 1998, the Real Estate Select Sector SPDR (XLRE) and the Financial Services Select Sector SPDR (XLFS) have gathered less than $10 million apiece in assets under management during their four months of trading. Keep in mind that the Financial Select Sector SPDR (XLF | A-93) has nearly $15 billion in assets.

It’s not unusual for new ETFs to take some time to accumulate meaningful assets, but given the size of the Select Sector SPDR family as a whole—the smallest member is the Materials Select Sector SPDR (XLB | A-80), with $1.8 billion—it is a little surprising that the new pair of funds has seen so little investor attention.

That said, XLF is definitely entrenched in investors' minds and portfolios—it’s the first ETF to be referenced when discussing the performance of the financial sector. Further, the original Select Sector SPDR family doesn’t hew that closely to the traditional sector structure, combining the technology and telecommunications sectors into the $11 billion Technology Select Sector SPDR (XLK | A-91), so investors in the funds may not be too concerned about accurately reflecting the changes to the classification system.

Also, XLF has seen nearly $60 million in outflows since the new funds launched, which suggests that investors may be feeling a bit lukewarm about the financial sector as a whole.

Contact Heather Bell at [email protected].