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A Slice of the S&P500

The Select Sector SPDR Exchange Traded Funds divide the S&P 500 into ten sectors. Select Sector SPDRs let you achieve the security of investing in the well-known, large cap stocks of the S&P 500, with the ability to over-weight or under-weight particular sectors based on your own investment goals and strategies.

Technology Select Sector SPDR XLK offers market- cap weighted exposure to the largest U.S. information technology and telecommunications sector stocks.

This fund targets technology and telecom stocks in the S&P 500. This is a concentrated portfolio. Indeed, this fund holds about 70 stocks. The largest stocks in this sectors include Apple AAPL, Microsoft MSFT, Facebook FB, and AT&T T. Giant- and large-cap stocks make up over 90% of the portfolio. These larger stocks tend to be more mature, more profitable, and less volatile than their smaller counterparts.

The technology sector is the largest in the S&P 500, representing about 21% of the index. But this is still a concentrated portfolio. At the end of December 2016, the top 10 holdings made up over 60% of the portfolio. These include Apple (13.7%), Microsoft (10.5%), Facebook (6.4%), AT&T (5.5%), and Alphabet GOOGL GOOG (the combined A and C share classes equal 10.7%). Nearly 55% of the fund’s assets were parked in three industries: Internet software and services, software, and computers and peripherals.

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