Market Overview

Best Sector ETFs For December: Repeat Performers

Best Sector ETFs For December: Repeat Performers

December is believed to be a good month for U.S. equities and historical data affirm that belief. Over the past 20 years, the S&P 500 averages a December gain of 1.4 percent, according to

That ties December with November as the fourth-best month of the year for the S&P 500 over the past two decades.

What To Know 

At the sector level, December brings some familiar opportunities accessible via exchange traded funds. Familiar because the sector ETFs with strong December reputations have historically performed well in November, too.

The Materials Select Sector SPDR (NYSE: XLB), the largest materials ETF by assets, averages a December gain of around 2.50 percent, according to CXO Advisory data. That makes XLB the best sector SPDR in the month of December, making the final month of the year the second consecutive month in which XLB is usually the best sector SPDR ETF.

XLB was a solid performer in November, gaining 3.8 percent.

Why It's Important

The Industrial Select Sector SPDR (NYSE: XLI) ranks as the second-best sector SPDR in December, marking the second straight month in which the largest industrial ETF has that honor on a historical basis.

XLI averages a December gain of just under 2.50 percent, according to CXO data. Like XLB, XLI is coming off a strong November in which the industrial ETF gained 3.81 percent.

What's Next

In some months, some sector ETFs historically notch negative performances. Owing to December's reputation for equity market strength, no sector SPDR ETFs average negative returns in the last month of the year.

This month's historical “laggards” include the Consumer Staples SPDR (NYSE: XLP), which averages a December gain of just under 1 percent,” according to CXO. XLP, the largest consumer staples ETF, jumped 2.33 percent last month.

The Technology Select Sector SPDR (NYSE: XLK), the largest technology ETF, is usually the worst-performing sector SPDR in December, posting a modest gain.

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