Financial Select Sector SPDR (XLF) is an investment fund which copies the Financial Select Sector index. At least 95% of of XLF’s investments are in the same companies that the index i9nvests in. The index is industry specific and invests in insurance, capital markets, commercial banks, diversified financial services, real estate investment funds, thrifts and mortgage finance, consumer finance, etc. Because the fund is not diversified, but limited to one sector, to is open to both sector risk and non-diversification risk. Alternatively, if one can estimate market movements affecting the financial sector, then one can make a lot of money because this investment can move up (or down) very quickly.
Because the XLF fund deals only in financial organizations, it is very sensitive to the financial conditions, especially in the American economy but also in the world economy. The fund has dropped over the last 7 months from 17.16 to 11. In October it rose from 11.28 to 12.86 based on supposedly “good” financial news from Europe. My perspective is that the Greek – European debt situation will determine near the future of financial stocks. The financials have already fallen 17 to 12.86. They are probably undervalued. If Europe solves the debt problem, then I believe that the financial sector will rise and also the Financial Select Sector SPDR (XLF) will rise. However, if the Greeks and Europe don’t solve the debt crisis, then financial companies’ stocks, and perhaps even the companies themselves (remember MF Global), will go plummet. This is definitely a risk which depends on ones judgment of the situation. Regarding risk management, this opportunity is only expected to last between one to three months. also whoever purchase this investment should be monitoring it every day.
The spider funds are owned and organized by State Street Global Advisors (SSgA) which is an asset management group. They run several spider ETFs. Some of the mangers are: Jacques M. Longerstaey: Chris Johns, Gregory A. Ehret: and Richard Lacaille.
Disclaimer: The content on this site is general information. It is not given as a recommendation for any particular investor to purchase any particular investment. Each trader should do a thorough analysis on each investment before he purchases it.
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