ETF of the Week: ProShares S&P 500 Ex-Sector ETFs Suite

ProShares S&P 500 Ex-Sector ETFs focus on S&P 500 companies, exclusive of specific sectors. Each ETF seeks investment results, before fees and expenses, that track the performance of its index.

This suite allows investors to reduce or eliminate exposure to a sector they believe may underperform. These ETFs can help investors adjust their portfolios and ultimately build better ones.

There’s potentially a boost in performance by avoiding a sector that may underperform. For example, in times of falling energy prices, companies in that sector may have weighed down the performance of the S&P 500 as a whole. Investors may already have enough exposure to the sector elsewhere, such as through your line of work or other holdings.

There’s also the choice to diversify and manage risk where large exposure to a sector already exists. One can also customize their large-cap equity allocation with the liquidity, transparency, and cost-effectiveness of an ETF. Plus, when it comes down to it, the gain in broad market exposure means that investors are given greater control over their market exposure with a more tailored core U.S. equity strategy through an easy-to-use, cheap and efficient ETF investment vehicle.

Taking a look at the funds, the ProShares S&P 500 Ex-Energy ETF (SPXE) focuses on S&P 500® companies, except those in the energy sector. The top sectors include information tech (28.2%), health care (13.4%), consumer discretionary (12.6%), financials (11.6%), communication services (11.5%), industrials (8.8%), and consumer staples (6.0%).

The ProShares S&P 500 Ex-Financials ETF (SXPN) focuses on S&P 500® companies, except those in the financials and real estate sectors. Top sectors include tech (31.8%), health care (15.1%), consumer discretionary (14.3%), communication services (12.9%), industrials (9.9%), and consumer staples (6.8%).

SPXV, the ProShares S&P 500 Ex-Health Care ETF, focuses on S&P 500® companies, except those in the health care sector. The top sectors include tech (31.5%), consumer discretionary (14.1%), financials (13.0%), communication services (12.8%), industrials (9.8%), and consumer staples (6.7%).

The ProShares S&P 500 Ex-Technology ETF (SPXT) focuses on S&P 500® companies, except those in the information technology sector. The top sectors include health care (19.5%), consumer discretionary (12.5%), financials (16.7%), communication services (12.7%), industrials (11.5%), consumer staples (9.3%).

Compared to the S&P 500, which has the following sector breakdown: information technology (27.6%), healthcare (13%), consumer discretionary (12.3%), financials (11.5%), communication services (11.3%), industrials (8.1%), consumer staples (5.8%), energy (2.9%), real estate (2.6%), materials (2.5%), utilities (2.5%).

Consequently, the SPXT will exhibit the largest difference relative to SPY due to the technology sector’s weight, followed by SPXV, SPXN, and SPXE.

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