ETF Portfolio: Risk and Return Associated with Industry Sectors

If you want to use a sector investing strategy for your exchange traded fund (ETF) and other investments, know that various sectors fall in different places along the risk/return continuum.

According to the people at State Street Global Advisors (SSgA), purveyors of Select Sector SPDR ETFs, with input from Ibbotson Associates, the following sector allocations are the most appropriate for the U.S. equity portion of your portfolio.

Conservative portfolio (15 percent U.S. stocks)

Consumer Discretionary Select Sector SPDR (XLY)    5 percent

Consumer Staples Select Sector SPDR (XLP)    16 percent

Energy Select Sector SPDR (XLE)    14 percent

Financial Select Sector SPDR (XLF)    15 percent

Health Care Select Sector SPDR (XLV)    10 percent

Industrial Select Sector SPDR (XLI)    15 percent

Materials Select Sector SPDR (XLB)    10 percent

Technology Select Sector SPDR (XLK)    14 percent

Utilities Select Sector SPDR (XLU)    15 percent

Aggressive portfolio (63 percent U.S. stocks)

Consumer Discretionary Select Sector SPDR (XLY)    15 percent

Consumer Staples Select Sector SPDR (XLP)    8 percent

Energy Select Sector SPDR (XLE)    6 percent

Financial Select Sector SPDR (XLF)    23 percent

Health Care Select Sector SPDR (XLV)    16 percent

Industrial Select Sector SPDR (XLI)        9 percent

Materials Select Sector SPDR (XLB)    5 percent

Technology Select Sector SPDR (XLK)    18 percent

Utilities Select Sector SPDR (XLU)    6 percent

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