# How State Street Financial Select Sector SPDR ETF (XLF) compares with the whole market and its popular alternatives

> Source: BetterThanSPY research, https://betterthanspy.com/research/xlf
> Data as of October 22, 2026. Total returns include reinvested dividends. Past performance does not predict future results; nothing here is investment advice.

Built by QuantCommons' quantitative engine, this page is about relative opportunity, not data on XLF alone. It places XLF (State Street Financial Select Sector SPDR ETF) against 20+ popular alternatives, its neighboring categories and the entire market of over 10,000 U.S.-listed stocks and ETFs, and surfaces what has done better on consistent outperformance, return for the risk taken, behavior in real market crashes and diversification. The result is a clearer view of where XLF stands in the market, and of the alternatives worth a closer look.

Period covered: XLF's full trading record, from December 1998 through September 2026. All returns include reinvested dividends. Data as of October 22, 2026.

## Key findings

- **What you're buying:** XLF is a financials bet first: 98% of assets, versus 12% in the S&P 500.
- **Right now:** XLF has edged past the market, rising 9.3% over the past 6 months against 8.0% for the S&P 500 and 7.8% for the Nasdaq 100. XLF sits 2.9% below its record high, and the S&P 500 is similarly close to its own.
- **Fund or market?:** XLF rose 1.4% over the past 3 months, in line with the S&P 500, which rose 2.5%: a market move, not its own. Its similar funds did not move as one over the past 3 months: IAK (iShares U.S. Insurance ETF) rose 4.5%, while KBWB (Invesco KBW Bank ETF) fell 8.7%.
- **Long term:** XLF turned $10,000 into $34,500 over the past decade, against $41,600 in the S&P 500. On the flip side, its 10-year return of 245% puts it ahead of 83% of the ETFs with at least $100 million in assets with that much history. The S&P 500 returned 316%.
- **In a crash:** Across seven sell-offs, XLF has typically fallen 1.3 times as far as the S&P 500.
- **Diversification:** XLF fell in 18 of the 22 months the S&P 500 fell over the past 5 years: it usually fell with it. Over 10 years, XLF's beta versus the S&P 500 was 1.02: in the S&P 500's rising months it gained 1.0 times as much as the index, and in falling months it lost 1.1 times as much.
- **Better options**
  - **Popular alternatives:** SPY (State Street SPDR S&P 500 ETF), VTV (Vanguard Morningstar Value ETF) and VYM (Vanguard High Dividend Yield ETF) earned more than XLF with less volatility over the past 5 years. SPY returned 12.5% a year at 17.2% volatility, against 8.7% a year at 18.3%.
  - **Nearby categories and themes:** BRK-A (Berkshire Hathaway, insurance) earned more than XLF with less volatility over the past 5 years: 13.5% a year at 17.2% volatility, against 8.7% a year at 18.3%.
  - **Versus the S&P 500:** Simply owning the S&P 500 would have done better over the past 5 years: 12.5% a year at 17.2% volatility, against 8.7% at 18.3% for XLF.

## How much would $10,000 in XLF have grown?

This chart tracks a hypothetical $10,000 investment in XLF over the past 24 years, with dividends reinvested, alongside the same amount in the S&P 500, investments that ended ahead of XLF over the same span and XLF's popular alternatives, among those that traded for the entire period.

- $10,000 invested in XLF at the end of September 2002 would have grown to $51,341 by September 2026, less than the $144,215 it would have become in SPY, an S&P 500 fund.
- All five other investments on the chart ended ahead of XLF, and XLK finished highest, at $444,902.

## XLF at a glance

This section summarizes the key facts about the fund, its returns over periods from one to ten years and the risk it has carried, with dividends reinvested throughout.

- XLF's deepest decline since it began trading in 1998 was 82.7%, from June 2007 to March 2009. It took about eight years from the low to climb back to its old high.
- Over 27 full calendar years, XLF's best was 2013, when it returned 35.5%, and its worst was 2008, when it lost 55.0%. It lost money in nine of those years.
- XLF is 2.9% below its all-time high.

- Type: ETF, Financials (Asset Management)
- Trading since: December 22, 1998
- Assets: $51B
- Expense ratio: 0.08%
- Volatility (5 years): 18.3%; Sharpe ratio: 0.55
- Worst decline ever: −82.7%, from June 1, 2007 to March 6, 2009; back at its high by July 25, 2017

| Period | XLF total return |
| --- | --- |
| 1 month | +3.4% |
| 3 months | +1.4% |
| 6 months | +9.3% |
| year to date | +4.4% |
| 1 year | +9.8% |
| 3 years | +85.5% |
| 5 years | +52.0% |
| 10 years | +245% |

## XLF against the whole market

Where XLF ranks among every stock and fund, and what across the market has done better.

### How does XLF rank among all ETFs?

This section ranks XLF on return, volatility, risk-adjusted return and worst decline against every ETF worth at least $100 million with enough history.

- XLF's 10-year return ranks in the top 17% of the 958 ETFs with at least $100 million in assets with 10 years of history.

| Measure | XLF | Rank |
| --- | --- | --- |
| 1-year return | +9.8% | 1,301 of 2,488 (top 53%) |
| 3-year return | +85.5% | 440 of 1,950 (top 23%) |
| 5-year return | +52.0% | 631 of 1,563 (top 41%) |
| 10-year return | +245% | 167 of 958 (top 18%) |
| Volatility, 5 years | 18.3% | 971 of 1,563 (top 63%) |
| Sharpe ratio, 5 years | 0.55 | 817 of 1,563 (top 53%) |
| Worst decline, past 10 years | −42.9% | 642 of 951 (top 68%) |

### What has beaten XLF on both return and risk?

Each dot is an investment, placed by how much it earned a year over the past 5 years (higher is better) and how much its price swung, its volatility (further left is calmer).

- Three stocks and 193 ETFs worth at least $500 million sit in the green region: each earned more than XLF over the past 5 years with smaller price swings. That is 5% of the 3,641 screened.
- Among those with at least half XLF's swings, LVHI has the best return for its risk: 16.9% a year at 11.1% volatility, 39% less than XLF's 18.3%, and a Sharpe ratio (return above cash per unit of volatility) of 1.48 against 0.55 for XLF. TPYP earned the most, 17.2% a year, while still swinging less than XLF (17.3% against 18.3%).
- Among XLF's popular alternatives, VTV, VYM and SPY are in the region. VTV earned 12.2% a year against 8.7% a year for XLF, at 13.7% volatility, 25% less than XLF's 18.3%.

### Is there a better investment than XLF?

The table below lists investments that beat XLF over the past 5 years on at least one of these measures: a higher annual return with lower volatility, a higher annual return at similar volatility, a similar return with lower volatility, a higher Sharpe ratio with a smaller worst decline, a higher total return in most periods from 3 months to 10 years, or smaller losses in recent market crashes, and, for funds, the same exposure at a lower expense ratio.

- Among XLF's popular alternatives, SPY, VTV and VYM earned more than XLF with less volatility over the past 5 years. SPY returned 12.5% a year at 17.2% volatility, against 8.7% a year at 18.3%.
- Looking beyond its popular alternatives, BRK-A (insurance) earned more than XLF with less volatility over the past 5 years: 13.5% a year at 17.2% volatility, against 8.7% a year at 18.3%.
- Simply owning the S&P 500 would have done better over the past 5 years: 12.5% a year at 17.2% volatility, against 8.7% at 18.3% for XLF.

The 15 strongest of 196 investments that beat XLF over the past 5 years, out of 3,641 stocks and funds worth at least $500 million.

| Investment | Group | Annual return (5 years) | Volatility | Sharpe | Worst decline (10 years) | 10Y return | Correlation with XLF | Better on |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| XLF: State Street Financial Select Sector SPDR ETF (this page) |  | +8.7% | 18.3% | 0.55 | −42.9% | +245% |  |  |
| [VOO](https://betterthanspy.com/research/voo): Vanguard S&P 500 ETF | US Large-Cap Equity | +12.6% | 16.9% | 0.79 | −34.0% | +319% | 0.75 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| [VIG](https://betterthanspy.com/research/vig): Vanguard Dividend Appreciation ETF | Dividend Growth | +10.4% | 14.1% | 0.77 | −31.7% | +258% | 0.82 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| [SCHD](https://betterthanspy.com/research/schd): Schwab U.S. Dividend Equity ETF | US Dividend Equity | +10.2% | 14.4% | 0.75 | −33.4% | +256% | 0.76 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| FNDX: Schwab Fundamental U.S. Large Company ETF | US Large-Cap Value | +13.6% | 14.9% | 0.93 | −37.7% | +292% | 0.85 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| DGRW: WisdomTree U.S. Quality Dividend Growth Fund | US Dividend Equity | +11.7% | 14.0% | 0.87 | −32.0% | +271% | 0.78 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| IOO: iShares Global 100 ETF | Global Equity | +15.6% | 17.2% | 0.94 | −31.4% | +357% | 0.66 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| [KO](https://betterthanspy.com/research/ko): The Coca-Cola Company | Nonalcoholic Beverages | +15.2% | 16.8% | 0.93 | −37.0% | +205% | 0.32 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods |
| EQWL: Invesco S&P 100 Equal Weight ETF | US Large-Cap Equity | +11.7% | 15.0% | 0.82 | −34.3% | +294% | 0.85 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| QUS: State Street SPDR MSCI USA StrategicFactors ETF | US Multifactor Equity | +11.1% | 14.2% | 0.81 | −33.8% | +276% | 0.81 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| VLU: State Street SPDR S&P 1500 Value Tilt ETF | US Value Equity | +12.4% | 15.2% | 0.85 | −37.4% | +274% | 0.88 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods; Smaller losses in recent crashes |
| [QUAL](https://betterthanspy.com/research/qual): iShares MSCI USA Quality Factor ETF | US Quality Equity | +11.2% | 17.3% | 0.70 | −34.1% | +290% | 0.74 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods |
| [BRK-A](https://betterthanspy.com/research/brk-a): Berkshire Hathaway Inc. | Insurance | +13.5% | 17.2% | 0.83 | −30.4% | +281% | 0.65 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods |
| DIVB: iShares Core Dividend ETF | High Dividend Yield | +14.6% | 15.5% | 0.96 | −36.9% | — | 0.86 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods |
| PWV: Invesco Large Cap Value ETF | US Large-Cap Value | +13.7% | 14.2% | 0.98 | −37.6% | +226% | 0.89 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods |
| RODM: Hartford Multifactor Developed Markets (ex-US) ETF | Developed International Equity | +10.6% | 13.5% | 0.82 | −36.0% | +142% | 0.70 | Higher return, lower volatility; Higher Sharpe, smaller worst decline; Higher return in most periods |

## XLF against its popular alternatives

The investments people most often weigh against XLF, compared period by period and year by year.

### How do XLF's risk and return compare with its alternatives?

This map plots each investment's annual return over the past 5 years against its volatility, the size of its typical price swings.

- Four of the 19 popular alternatives, led by IAK, IXG and VTV, were both more rewarding and calmer than XLF over the past 5 years, earning a higher annual return with lower volatility.
- Over the past 5 years, XLF returned 8.7% a year, less than the S&P 500's 12.5%, with higher volatility (18.3% against 17.2%).

### Has XLF consistently beaten its popular alternatives?

This section compares XLF with the investments people most often weigh against it, checking each one over eight periods from one month to ten years.

- Two of the 21 popular alternatives, XLK and SPY, outperformed XLF in at least 3 of 5 short-term and 2 of 3 long-term timeframes.
- VTV, VYM and XLK earned more for the risk they took than XLF (a higher Sharpe ratio) and fell less in their worst decline of the past 10 years.
- IAI outperformed XLF over all three long-term periods but in none of the five short-term ones, so XLF has had the better of it lately.

| Investment | 1Y return | 3Y return | 5Y return | 10Y return | Periods ahead of XLF | Verdict | Sharpe |
| --- | --- | --- | --- | --- | --- | --- | --- |
| XLF: State Street Financial Select Sector SPDR ETF (this page) | +9.8% | +85.5% | +52.0% | +245% |  |  | 0.55 |
| [XLK](https://betterthanspy.com/research/xlk): State Street Technology Select Sector SPDR ETF | +28.4% | +126% | +139% | +741% | 3/5 short-term, 3/3 long-term | consistent | 0.80 |
| [SPY](https://betterthanspy.com/research/spy): State Street SPDR S&P 500 ETF | +15.6% | +88.4% | +80.3% | +316% | 3/5 short-term, 3/3 long-term | consistent | 0.78 |
| IAI: iShares U.S. Broker-Dealers & Securities Exchanges ETF | +6.7% | +114% | +70.4% | +404% | 0/5 short-term, 3/3 long-term |  | 0.60 |
| KCE: State Street SPDR S&P Capital Markets ETF | +6.5% | +101% | +62.3% | +377% | 0/5 short-term, 3/3 long-term |  | 0.54 |
| IXG: iShares Global Financials ETF | +16.9% | +106% | +78.9% | +221% | 2/5 short-term, 2/3 long-term |  | 0.77 |
| EUFN: iShares MSCI Europe Financials ETF | +19.6% | +139% | +130% | +224% | 1/5 short-term, 2/3 long-term |  | 0.88 |
| IYG: iShares U.S. Financial Services ETF | +9.4% | +98.6% | +50.4% | +267% | 0/5 short-term, 2/3 long-term |  | 0.51 |
| IYF: iShares U.S. Financials ETF | +9.9% | +91.9% | +58.8% | +244% | 0/5 short-term, 2/3 long-term |  | 0.59 |
| IAK: iShares U.S. Insurance ETF | +20.1% | +73.9% | +94.3% | +247% | 5/5 short-term, 1/3 long-term |  | 0.83 |
| KIE: State Street SPDR S&P Insurance ETF | +14.5% | +61.5% | +69.4% | +211% | 5/5 short-term, 1/3 long-term |  | 0.67 |
| [VTV](https://betterthanspy.com/research/vtv): Vanguard Morningstar Value ETF | +23.9% | +80.9% | +78.0% | +237% | 4/5 short-term, 1/3 long-term |  | 0.91 |
| FXO: First Trust Financials AlphaDEX Fund | +16.6% | +93.3% | +52.0% | +237% | 2/5 short-term, 1/3 long-term |  | 0.50 |
| [VYM](https://betterthanspy.com/research/vym): Vanguard High Dividend Yield ETF | +18.5% | +75.9% | +72.8% | +209% | 2/5 short-term, 1/3 long-term |  | 0.87 |
| KBE: State Street SPDR S&P Bank ETF | +18.1% | +105% | +32.7% | +143% | 2/5 short-term, 1/3 long-term |  | 0.35 |
| IAT: iShares U.S. Regional Banks ETF | +24.0% | +111% | +5.6% | +116% | 2/5 short-term, 1/3 long-term |  | 0.18 |
| KRE: State Street SPDR S&P Regional Banking ETF | +22.6% | +102% | +14.1% | +114% | 2/5 short-term, 1/3 long-term |  | 0.24 |
| KBWB: Invesco KBW Bank ETF | +20.1% | +156% | +38.4% | +200% | 1/5 short-term, 1/3 long-term |  | 0.38 |
| VFH: Vanguard Financials ETF | +9.7% | +88.2% | +51.5% | +236% | 0/5 short-term, 1/3 long-term |  | 0.53 |
| FNCL: Fidelity MSCI Financials Index ETF | +9.9% | +88.3% | +51.4% | +235% | 0/5 short-term, 1/3 long-term |  | 0.54 |
| RSPF: Invesco S&P 500 Equal Weight Financials ETF | +11.4% | +79.5% | +36.6% | +219% | 2/5 short-term, 0/3 long-term |  | 0.42 |
| XLRE: State Street Real Estate Select Sector SPDR ETF | +3.5% | +45.1% | +5.7% | +89.6% | 1/5 short-term, 0/3 long-term |  | 0.15 |

### How did XLF do year by year?

This table shows each investment's total return in every full calendar year since 1999, along with where XLF ranked among its popular alternatives each year.

- XLF finished ahead of the S&P 500 in 13 of its 27 full calendar years.
- Among its popular alternatives, IYG came out ahead of XLF most often, in 15 of the 25 years both traded.
- Ranked against its popular alternatives each year, XLF finished in the top quarter in three of 24 years and in the bottom quarter in three. In 2025, it ranked 11 of 20.

| Year | XLF | SPY |
| --- | --- | --- |
| 2025 | +14.9% | +17.7% |
| 2024 | +30.6% | +24.9% |
| 2023 | +12.0% | +26.2% |
| 2022 | −10.6% | −18.2% |
| 2021 | +34.8% | +28.7% |
| 2020 | −1.7% | +18.3% |
| 2019 | +31.9% | +31.2% |
| 2018 | −13.1% | −4.6% |
| 2017 | +22.0% | +21.7% |
| 2016 | +22.4% | +12.0% |

## Risk and diversification

How XLF has fallen, how it held up in crashes beside the S&P 500 and its popular alternatives, and what moves independently of it.

### What were XLF's worst declines?

A drawdown is the decline from a peak to the lowest point before a new high.

- In four of XLF's five worst declines, the S&P 500 held up better over the same dates.
- Not every decline was the market's doing: XLF fell 26.4% from May 1999 to February 2000, while the S&P 500 slipped only 2.1%.
- The slowest recovery came after XLF fell 82.7% from June 2007 to March 2009; it did not regain that peak until July 2017, eight years later.

| Decline | Peak | Low | Back at the high | SPY over the same dates | Market event |
| --- | --- | --- | --- | --- | --- |
| −82.7% | June 1, 2007 | March 6, 2009 | July 25, 2017 | −53.5% | 2008 financial crisis |
| −42.9% | February 14, 2020 | March 23, 2020 | January 6, 2021 | −33.6% | Covid crash |
| −36.6% | January 3, 2001 | October 9, 2002 | January 15, 2004 | −40.8% | dot-com bust |
| −26.4% | May 13, 1999 | February 25, 2000 | June 2, 2000 | −2.1% |  |
| −25.8% | January 12, 2022 | October 12, 2022 | February 22, 2024 | −23.4% | 2022 bear market |

### How did XLF do in stock market crashes?

This section measures how far XLF, the S&P 500 and each alternative fell from peak to trough during every major market crash since 2000.

- XLF fell further than the S&P 500 in eight of the ten crashes it has traded through. The clearest case was the 2008 financial crisis, when XLF fell 81.8% and the S&P 500 fell 55.2%.
- Among its popular alternatives, VTV held up best, falling less than XLF in eight of the nine crashes they both traded through.

| Crash | Dates | XLF fall | SPY fall |
| --- | --- | --- | --- |
| Dot-com bust | March 10, 2000 to October 9, 2002 | −36.6% | −47.5% |
| Global financial crisis | October 9, 2007 to March 9, 2009 | −81.8% | −55.2% |
| Flash crash | May 6, 2010 to May 7, 2010 | −1.1% | −1.5% |
| Euro debt crisis | July 22, 2011 to October 3, 2011 | −26.1% | −17.9% |
| China devaluation & oil rout | August 10, 2015 to February 11, 2016 | −21.9% | −12.8% |
| Volmageddon | February 2, 2018 to February 9, 2018 | −7.5% | −6.5% |
| Q4 2018 selloff | September 21, 2018 to December 24, 2018 | −21.9% | −19.3% |
| COVID crash | February 19, 2020 to March 23, 2020 | −42.8% | −33.7% |
| 2022 bear market | January 4, 2022 to October 12, 2022 | −25.8% | −24.5% |
| SVB / regional bank stress | March 8, 2023 to March 13, 2023 | −9.5% | −3.4% |

### How closely does XLF move with the S&P 500?

Upside capture measures how much of the S&P 500's gains an investment kept in the months the market rose, and downside capture how much of its losses it took in the months the market fell.

- VYM took just 88% of the S&P 500's losses, against 107% for XLF, while still keeping 81% of its gains.
- Over the past 10 years, XLF captured 96% of the S&P 500's gains in rising months and 107% of its losses in falling months, with a beta of 1.02. Its share of the market's losses was larger than its share of the gains.
- Eight of the 19 popular alternatives had a higher capture ratio (upside capture divided by downside capture) than XLF's 0.90, led by XLK, IAK and IAI.

Measured over the past 10 years of monthly returns against SPY.

| Investment | Upside capture | Downside capture | Beta |
| --- | --- | --- | --- |
| XLF: State Street Financial Select Sector SPDR ETF (this page) | 96.0% | 107% | 1.02 |
| [XLK](https://betterthanspy.com/research/xlk): State Street Technology Select Sector SPDR ETF | 128% | 100% | 1.19 |
| IAI: iShares U.S. Broker-Dealers & Securities Exchanges ETF | 110% | 107% | 1.09 |
| KCE: State Street SPDR S&P Capital Markets ETF | 118% | 126% | 1.18 |
| IXG: iShares Global Financials ETF | 92.0% | 102% | 0.95 |
| EUFN: iShares MSCI Europe Financials ETF | 98.0% | 107% | 0.98 |
| IYG: iShares U.S. Financial Services ETF | 105% | 118% | 1.12 |
| IYF: iShares U.S. Financials ETF | 95.0% | 106% | 1.00 |
| IAK: iShares U.S. Insurance ETF | 74.0% | 68.0% | 0.73 |
| KIE: State Street SPDR S&P Insurance ETF | 75.0% | 77.0% | 0.78 |
| [VTV](https://betterthanspy.com/research/vtv): Vanguard Morningstar Value ETF | 86.0% | 91.0% | 0.86 |
| FXO: First Trust Financials AlphaDEX Fund | 96.0% | 111% | 1.07 |
| [VYM](https://betterthanspy.com/research/vym): Vanguard High Dividend Yield ETF | 81.0% | 88.0% | 0.82 |
| KBE: State Street SPDR S&P Bank ETF | 92.0% | 121% | 1.15 |
| IAT: iShares U.S. Regional Banks ETF | 89.0% | 123% | 1.13 |
| KRE: State Street SPDR S&P Regional Banking ETF | 86.0% | 117% | 1.12 |
| KBWB: Invesco KBW Bank ETF | 107% | 131% | 1.22 |
| VFH: Vanguard Financials ETF | 97.0% | 111% | 1.05 |
| RSPF: Invesco S&P 500 Equal Weight Financials ETF | 95.0% | 111% | 1.04 |
| XLRE: State Street Real Estate Select Sector SPDR ETF | 68.0% | 97.0% | 0.84 |

### What diversifies XLF?

Correlation measures how closely two investments move together, on a scale from 1 (in lockstep) through 0 (unrelated) to -1 (in opposite directions).

- Moving a fifth of the money in XLF into GLD would have cut the portfolio's volatility by 17% over the past 5 years and raised its annual return (+9.2% for XLF alone, +11.5% for the mix).
- Among large ETFs, DXJ, SMH and XLE have moved largely independently of XLF over the past 5 years, with correlations of 0.49 or lower, and each still earned a positive 5-year return.
- FIX made money in six of the nine calendar years in which XLF lost money.

| Investment | Correlation with XLF | 5Y return | Volatility | Sharpe | Rose in XLF's 9 down years |
| --- | --- | --- | --- | --- | --- |
| DXJ: WisdomTree Japan Hedged Equity Fund | 0.34 | +225% | 19.1% | 1.34 | 3 of 9 |
| [SMH](https://betterthanspy.com/research/smh): VanEck Semiconductor ETF | 0.37 | +304% | 37.0% | 0.94 | 3 of 9 |
| [XLE](https://betterthanspy.com/research/xle): State Street Energy Select Sector SPDR ETF | 0.49 | +178% | 25.5% | 0.94 | 3 of 9 |
| [GLD](https://betterthanspy.com/research/gld): SPDR Gold Shares | 0.05 | +120% | 19.0% | 0.93 | 4 of 9 |
| EWT: iShares MSCI Taiwan ETF | 0.35 | +147% | 24.3% | 0.87 | 3 of 9 |
| EDIV: State Street SPDR S&P Emerging Markets Dividend ETF | 0.43 | +69.0% | 13.8% | 0.83 | 0 of 9 |
| DBA: Invesco DB Agriculture Fund | 0.29 | +66.7% | 13.8% | 0.81 | 1 of 9 |
| IHE: iShares U.S. Pharmaceuticals ETF | 0.49 | +83.2% | 16.8% | 0.81 | 4 of 9 |

## Common questions

### What was XLF's worst drawdown?

XLF's deepest decline since it began trading in 1998 was 82.7%, from June 2007 to March 2009. It took about eight years from the low to climb back to its old high.

### What were XLF's best and worst years?

Over 27 full calendar years, XLF's best year was 2013, when it returned 35.5%. Its worst was 2008, with a return of -55.0%.

### Is there a better investment than XLF?

Among XLF's popular alternatives, SPY, VTV and VYM earned more than XLF with less volatility over the past 5 years. SPY returned 12.5% a year at 17.2% volatility, against 8.7% a year at 18.3%. Looking beyond its popular alternatives, BRK-A (insurance) earned more than XLF with less volatility over the past 5 years: 13.5% a year at 17.2% volatility, against 8.7% a year at 18.3%.

### Is XLF more volatile than the S&P 500?

Yes. XLF's volatility over the past 5 years was 18.3%, 1.1 times the S&P 500's 17.2%. Volatility measures how widely returns swing around their average: in roughly two years out of three, XLF's return lands within 18.3% of its average, either way. The higher it is, the rougher the ride and the harder it is to hold through a slump.

### What is XLF's Sharpe ratio?

XLF's Sharpe ratio over the past 5 years was 0.55, against 0.78 for the S&P 500, so XLF earned less for each unit of risk than an index fund did. The Sharpe ratio is the return earned above cash for each unit of volatility: two investments with the same return are not equal if one got there with far bigger swings.

### How correlated is XLF with the S&P 500?

Over the past 5 years, XLF's monthly returns had a correlation of 0.75 with the S&P 500. Correlation runs from 1 (moving in lockstep) through 0 (unrelated) to −1 (moving in opposite directions). They often move together: some diversification next to an index fund, but not a cushion. In the table, the correlation column measures each option against XLF instead: the lower it is, the more that option would diversify a XLF holding.

### What are the best alternatives to XLF?

Of the 21 popular alternatives we compared, two outperformed XLF in at least 3 of 5 short-term and 2 of 3 long-term timeframes, with dividends reinvested: XLK and SPY.

### Did XLF outperform the S&P 500?

XLF finished ahead of the S&P 500 (SPY) in 13 of 27 full calendar years. In 2025, it returned +14.9%, against +17.7% for the index.

### How did XLF do in stock market crashes?

XLF fell less than the S&P 500 (SPY) in one of the ten major crashes it has traded through, and further in eight. The clearest case was the 2008 financial crisis, when XLF fell 81.8% and the S&P 500 fell 55.2%.

### What diversifies XLF?

These had a low correlation with XLF over the past 5 years and still earned a positive 5-year return: among large ETFs, DXJ (correlation 0.34), SMH (correlation 0.37) and XLE (correlation 0.49); among large stocks, CAH (correlation 0.37), CLS (correlation 0.37) and MCK (correlation 0.28). A correlation near zero means the two have moved largely independently.

## More research

- [State Street Technology Select Sector SPDR ETF (XLK) Performance, Alternatives and Market Rank](https://betterthanspy.com/research/xlk)
- [State Street SPDR S&P 500 ETF (SPY) Performance, Alternatives and Market Rank](https://betterthanspy.com/research/spy)
- [Vanguard Morningstar Value ETF (VTV) Performance, Alternatives and Market Rank](https://betterthanspy.com/research/vtv)
- [Vanguard High Dividend Yield ETF (VYM) Performance, Alternatives and Market Rank](https://betterthanspy.com/research/vym)
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## Explore further

- Full page with charts: https://betterthanspy.com/research/xlf
- All research pages: https://betterthanspy.com/llms.txt
- Compare the entire market against XLF live: https://betterthanspy.com/?b=XLF