Strategists Warn About The Financial Sector As The Financial ETF Sets A New 52-Week High

The rally in the Financial Select Sector SPDR Fund (XLF) on Wednesday means the exchange-traded fund has more than doubled in value from a year ago. The ETF set a new 52-week high of $15.97 a share on Wednesday. One year ago on March 17, 2009, the fund touched a session low of $7.87, according to data from FactSet Research.

But, according to Citigroup’s global equity strategists things are going to change.

“Citi’s global equity strategists are warning that the financial sector will level out over the next two years, as history shows that one year after the market bottom high beta trades, like the financials in the current cycle, do well in the surge but fade during the grind. The firm sees the “problem child” or ultra high beta trades of the current market movement as the financial sector, which has jumped 63 percent in the last year. Citi is downgrading the financials from Overweight to Neutral heading into the second year of the bull market,” Street Insider Reports.

Street Insider goes on to report, “Over the next two years Citi expects the global equities to grind higher over the next two years, but the strategies that worked best in the first year following the market surge will become less appropriate as market slowly over the next two years.”

“Despite all the talk about the structural impact of the global financial crisis and subsequent deep recession, this equity market rebound appears remarkably normal,” the Citi report said.

“The firm believes that the market movement in the early months of 2010 shows a blueprint of what is coming in the next two years. The analysts suggest that investors will be able to gain a good profit if they buy into the dips in the market, but warn that chasing a rally too hard will result in a likely poor return,” Street Insider Reports.

Here are some details on the Financial Select Sector SPDR Fund (XLF) including its holdings below:

The investment (XLF) includes companies from the following industries: banks, diversified financials, insurance and real estate. The fund will normally invest at least 95% of its total assets in common stocks that comprise the relevant Select Sector Index. This fund has adopted a policy that requires it to provide shareholders with at least 60 days notice prior to any significant material change in its policy or its underlying index. It is nondiversified.

Financial Select Sector SPDR ETF (XLF) Components and weightings

  Name Symbol Index Weight
1 JPMorgan Chase & Co. (JPM) 11.65%
2 Bank of America Corp. (BAC) 11.04%
3 Wells Fargo & Co. (WFC) 9.76%
4 Goldman Sachs Group Inc. (GS) 5.93%
5 Citigroup Inc. (C) 4.63%
6 American Express Co. (AXP) 3.30%
7 U.S. Bancorp (USB) 3.06%
9 Bank of New York Mellon Corp. (BK) 2.35%
10 MetLife Inc. (MET) 2.07%
11 Travelers Cos. Inc. (TRV) 1.76%
12 PNC Financial Services Group Inc. (PNC) 1.74%
13 Prudential Financial Inc. (PRU) 1.65%
14 CME Group Inc. Cl A (CME) 1.54%
15 AFLAC Inc. (AFL) 1.53%
16 State Street Corp. (STT) 1.49%
17 Simon Property Group Inc. (SPG) 1.45%
18 Capital One Financial Corp. (COF) 1.26%
19 BB&T Corp. (BBT) 1.24%
20 Charles Schwab Corp. (SCHW) 1.21%
21 Allstate Corp. (ALL) 1.11%
22 Chubb Corp. (CB) 1.10%
23 Franklin Resources Inc. (BEN) 1.07%
24 T. Rowe Price Group Inc. (TROW) 0.92%
25 Loews Corp. (L) 0.91%
26 Northern Trust Corp. (NTRS) 0.84%
27 Progressive Corp. (PGR) 0.79%
28 Marsh & McLennan Cos. (MMC) 0.77%
29 SunTrust Banks Inc. (STI) 0.76%
32 Ameriprise Financial Inc. (AMP) 0.71%
33 AON Corp. (AON) 0.69%
34 Hartford Financial Services Group Inc. (HIG) 0.66%
35 INVESCO Ltd. (IVZ) 0.65%
36 Boston Properties Inc. (BXP) 0.62%
38 HCP Inc. (HCP) 0.59%
40 Principal Financial Group Inc. (PFG) 0.54%
41 Lincoln National Corp. (LNC) 0.54%
42 Discover Financial Services (DFS) 0.54%
43 IntercontinentalExchange Inc. (ICE) 0.53%
44 Host Hotels & Resorts Inc. (HST) 0.52%
46 UNUM GROUP (UNM) 0.45%
47 NYSE Euronext (NYX) 0.45%
48 Hudson City Bancorp Inc. (HCBK) 0.45%
49 Ventas Inc. (VTR) 0.45%
50 Avalonbay Communities Inc. (AVB) 0.43%
51 PROLOGIS (PLD) 0.43%
52 Genworth Financial Inc. Cl A (GNW) 0.42%
53 Plum Creek Timber Co. Inc. REIT (PCL) 0.42%
54 XL Capital Ltd. Cl A (XL) 0.41%
55 M&T Bank Corp. (MTB) 0.40%
56 People’s United Financial Inc. (PBCT) 0.39%
57 KEYCORP (KEY) 0.38%
58 Kimco Realty Corp. (KIM) 0.37%
59 SLM CORP. (SLM) 0.37%
60 Health Care REIT Inc. (HCN) 0.36%
61 Moody’s Corp. (MCO) 0.35%
62 Legg Mason Inc. (LM) 0.33%
63 Comerica Inc. (CMA) 0.33%
64 Leucadia National Corp. (LUK) 0.32%
65 Cincinnati Financial Corp. (CINF) 0.29%
66 American International Group Inc. (AIG) 0.26%
67 CB Richard Ellis Group Inc. Cl A (CBG) 0.25%
68 Torchmark Corp. (TMK) 0.25%
69 Assurant Inc. (AIZ) 0.24%
70 Marshall & Ilsley Corp. (MI) 0.24%
71 First Horizon National Corp. (FHN) 0.21%
72 Huntington Bancshares Inc. (HBAN) 0.20%
73 NASDAQ OMX Group Inc. (NDAQ) 0.20%
74 E*TRADE Financial Corp. (ETFC) 0.18%
75 Janus Capital Group Inc. (JNS) 0.17%
76 Federated Investors Inc. (FII) 0.16%
78 Apartment Investment & Management Co. (AIV) 0.13%

Chart for Financial Select Sector SPDR (XLF)

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