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This Popular Tech ETF Is Usually A July Winner

July 3, 2019 7:38 am
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This Popular Tech ETF Is Usually A July Winner

July is not the worst of the year for stocks, but it's not the best, either. Some exchange traded funds have solid July track records and that includes the Technology Select Sector SPDR (NYSE:XLK).

What Happened

XLK, the largest technology ETF by assets has a stellar July record over the past decade.

“XLK is the only ETF with a 100% win rate, averaging a very healthy monthly gain of about 4%. Digging deeper, XLK hasn't ended July lower since dropping 2.4% in July 2008,” according to Schaeffer's Investment Research.

Taking that data point with a grain salt, it's worth nothing it measures only the past decade and XLK, like the other eight original sector SPDR ETFs, debuted in July 1998, meaning there are two decades worth of July performances for XLK and friends.

Why It's Important

XLK's ability to live up to its July reputation is important for several reasons, not the least of which is the fact that technology is the S&P 500's largest sector weight. Just two days into the month, XLK is off to a decent start, having notched two consecutive higher closes to start July.

The $21 billion XLK is home to 68 stocks, including bellwethers such as Microsoft Corp. (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL). Those stocks combine for about 36% of the fund's weight. Said another way, XLK and rival tech ETFs are usually good gauges regarding risk appetite. Fortunately for XLK investors, Apple is often stout performer in July, too, according to historical data.

For the week ended July 1, investors pulled $411.11 million from XLK, indicating some may not be willing to wait around to see if the fund duplicates past July showings.

What's Next

XLK's median July return of 3.30% is nearly double that of the next-best ETF in the seventh month, according to Schaeffer's data.

Much of how XLK performs in July could be determined late in the month when Apple reports June quarter results on July 30.

Related Links:

Best Sector ETFs For July

A Good Mid-Cap Deal

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