When we invest in an ETF that tracks the S&P 500 Index, such as the State Street SPDR S&P 500 ETF Trust (NYSE ARCA: SPY), we are essentially gaining exposure to hundreds of the largest companies in the United States by market capitalisation, spread across a wide range of industries.

While investing in the broader S&P 500 is a popular option among retail investors, some may prefer to have more targeted exposure towards specific sectors of the economy. One way to do so is through State Street’s Select Sector SPDR ETFs, which comprise 11 different ETFs — one representing each sector within the S&P 500 Index.

Each of these 11 sector ETFs contains only S&P 500 companies that belong to the respective sector. For example, the Technology Select Sector SPDR ETF comprises only companies classified under the technology sector that are also constituents of the S&P 500 Index.

The companies within each ETF are weighted according to their market capitalisation, and collectively, the 11 sector ETFs cover all of the companies within the S&P 500 Index.

In this post, let us take a closer look at each of the 11 sector ETFs, including what they invest in, their top holdings, how their dividend payouts have moved over the 5-year period between 2021 and 2025, as well as their capital appreciation over the same period.

1. Materials Select Sector SPDR ETF (NYSE ARCA: XLB)

The Materials Select Sector SPDR ETF provides investors with exposure to companies that produce many of the basic materials used throughout the economy, including chemicals, metals, mining products, packaging materials, and construction materials.

Linde plc has the largest weightage in the ETF, at approximately 13%, while none of the remaining companies has a weightage of more than 5.9%.

Some of the other companies with the heaviest weightage include Newmont Corporation, Freeport-McMoRan Inc, The Sherwin-Williams Company, Ecolab Inc, Air Products and Chemicals Inc, Corteva Inc, Nucor Corporation, Vulcan Materials Company, and CRH plc.

The ETF pays dividends on a quarterly basis. However, its dividend payouts over the past 5 years have been rather uneven:

US$1.4715 (2021) → US$1.0392 (2022) → US$1.4139 (2023) → US$0.9690 (2024) → US$0.8696 (2025)

The fluctuations are perhaps unsurprising considering the cyclical nature of the materials sector, where company earnings can be influenced by commodity prices and economic conditions.

Returns-wise, if you had invested in the ETF at the start of 2021, at its opening price of US$36.51 on 04 January 2021, and remained invested until the end of 2025, when it closed at US$45.35 on 31 December 2025, you would have been sitting on an unrealised capital gain of approximately 24.2%, translating to a compound annual growth rate (CAGR) of about 4.4% over the 5-year period.

2. Communication Services Select Sector SPDR ETF (NYSE ARCA: XLC)

The Communication Services Select Sector SPDR ETF invests in companies involved in areas such as social media, internet platforms, telecommunications, entertainment, and traditional media.

Meta Platforms Inc, together with Alphabet Inc’s Class A and Class C shares, collectively account for approximately 36.4% of the ETF.

Meanwhile, its top 10 holdings make up slightly more than 68% of the ETF, which means its overall performance can be significantly influenced by how these largest holdings perform.

Apart from Meta Platforms Inc and Alphabet Inc, some of the other major holdings include AT&T Inc, Verizon Communications Inc, Electronic Arts Inc, T-Mobile US Inc, Comcast Corporation, Take-Two Interactive Software Inc, and The Walt Disney Company.

Investors in the ETF receive dividends once every quarter. Apart from a slight decline in 2022, its annual dividend payout has generally trended upwards over the past 5 years:

US$0.5718 (2021) → US$0.5298 (2022) → US$0.5963 (2023) → US$0.9619 (2024) → US$1.3272 (2025)

From a capital appreciation point of view, an investor who bought the ETF at its opening price of US$67.75 on 04 January 2021 and held it until 31 December 2025, when it closed at US$117.72, would have enjoyed a capital gain of close to 74%, representing a CAGR of approximately 11.7% over 5 years.

3. Energy Select Sector SPDR ETF (NYSE ARCA: XLE)

The Energy Select Sector SPDR ETF provides exposure to some of the largest energy companies in the S&P 500, particularly those involved in oil and gas production, refining, transportation, as well as energy-related equipment and services.

ExxonMobil and Chevron Corporation have the largest weightages in the ETF, at approximately 20.6% and 15.3%, respectively.

Together, the 2 companies account for close to 36% of the ETF. The remaining major constituents, including ConocoPhillips, Marathon Petroleum Corporation, Phillips 66, Valero Energy Corporation, EOG Resources Inc, SLB N.V., Kinder Morgan Inc, and The Williams Companies Inc, each have a weightage of no more than 6.1%.

As such, movements in ExxonMobil and Chevron can have a sizeable influence on the ETF’s overall performance.

The ETF distributes dividends quarterly. However, its payouts have fluctuated over the years. Dividends rose sharply in 2022 alongside higher oil prices, moderated in 2023 and 2024 as crude oil prices eased from their highs, before increasing slightly again in 2025:

US$1.1686 (2021) → US$1.6105 (2022) → US$1.4884 (2023) → US$1.4381 (2024) → US$1.4647 (2025)

If you had invested in the ETF at its opening price of US$19.17 on 04 January 2021 and held on until the end of 2025, when it closed at US$44.71, your investment would have recorded a capital gain of more than 130%, equivalent to a CAGR of approximately 18.5%.

4. Financial Select Sector SPDR ETF (NYSE ARCA: XLF)

The Financial Select Sector SPDR ETF invests in major financial companies, including banks, insurers, payment networks, investment banks, and other financial-services businesses.

Among its constituents, only 2 companies have weightages above 10% – JPMorgan Chase & Co and Berkshire Hathaway, both at approximately 11.7%.

The remaining companies have individual weightages of no more than 7.6%. Collectively, the top 10 holdings make up close to 57% of the ETF, and include Visa Inc, Mastercard Incorporated, Bank of America Corporation, The Goldman Sachs Group Inc, Wells Fargo & Company, Morgan Stanley, Citigroup Inc, and American Express Company.

This means the performances of these larger holdings can have a meaningful impact on the overall performance of the ETF.

The ETF pays dividends quarterly. Its annual payout has generally improved over the past 5 years, with the exception of 2023:

US$0.6370 (2021) → US$0.6980 (2022) → US$0.6415 (2023) → US$0.6869 (2024) → US$0.7196 (2025)

For an investor who bought the ETF at its opening price of US$29.59 on 04 January 2021 and held it until 31 December 2025, when it closed at US$54.77, the investment would have recorded a sizeable capital appreciation of about 85% over the 5-year period, translating to a CAGR of approximately 13.1%.

5. Industrial Select Sector SPDR ETF (NYSE ARCA: XLI)

The Industrial Select Sector SPDR ETF provides exposure to companies involved in areas such as aerospace, defence, machinery, transportation, electrical equipment, and other industrial activities.

GE Aerospace and Caterpillar Inc are the 2 largest holdings, each with a weightage of approximately 6.7%. None of the remaining companies has a weightage exceeding 5.2%.

The top 10 holdings collectively make up close to 40% of the ETF, which includes RTX Corporation, GE Vernova Inc, Union Pacific Corporation, The Boeing Company, Eaton Corporation plc, Deere & Company, Uber Technologies, and Parker-Hannifin Corporation.

On the dividend front, investors receive payouts on a quarterly basis. More importantly, the ETF’s annual dividend payout increased in every single year between 2021 and 2025:

US$1.3181 (2021) → US$1.6053 (2022) → US$1.8557 (2023) → US$1.8987 (2024) → US$1.9978 (2025)

As for capital appreciation, investors who bought the ETF at US$88.66 at market open on the first trading day of 2021 and stayed invested until the end of 2025, when it closed at US$155.12, would have enjoyed an unrealised capital gain of close to 75%, translating to a CAGR of approximately 11.8%.

6. Technology Select Sector SPDR ETF (NYSE ARCA: XLK)

The Technology Select Sector SPDR ETF provides targeted exposure to some of America’s largest technology companies, including semiconductor manufacturers, software companies, and technology hardware businesses.

3 companies clearly stand out in terms of weightage – Nvidia Corporation at 13.8%, Apple Inc at 12.9%, and Microsoft Corporation at 9.8%.

Collectively, these 3 companies make up approximately 36.5% of the ETF. To put this into perspective, their combined weightage alone is comparable to the top 10 holdings of some of the other sector ETFs covered in this post.

As a result, the performance of these 3 technology giants can have a considerable influence on the ETF’s overall returns.

The other 7 companies among its top 10 holdings include Broadcom Inc, Advanced Micro Devices Inc, Micron Technology Inc, Cisco Systems Inc, Intel Corporation, Applied Materials Inc, and Lam Research Corporation.

The ETF pays dividends quarterly, and its annual payout has increased every year over the past 5 years:

US$0.5610 (2021) → US$0.6454 (2022) → US$0.7297 (2023) → US$0.7618 (2024) → US$0.7840 (2025)

Capital appreciation has also been impressive. An investor who bought the ETF at US$65.34 on market open at the start of 2021 and remained invested until the end of 2025, when it closed at US$143.97, would have been sitting on an unrealised gain of approximately 120%, translating to a CAGR of around 17%.

One of the major contributors to this strong performance has been the boom in artificial intelligence and machine learning, which has driven significant demand for cloud computing infrastructure as well as high-performance semiconductors used for AI applications.

7. Consumer Staples Select Sector SPDR ETF (NYSE ARCA: XLP)

The Consumer Staples Select Sector SPDR ETF invests in businesses selling everyday necessities that consumers generally continue purchasing regardless of economic conditions, including groceries, beverages, household products, and personal-care products.

Walmart Inc is the only company with a double-digit percentage weightage, at approximately 10.4%.

Other major holdings include Costco Wholesale Corporation, The Coca-Cola Company, The Procter & Gamble Company, Philip Morris International Inc, Colgate-Palmolive Company, Mondelez International Inc, Monster Beverage Corporation, PepsiCo Inc, and Altria Group Inc.

Collectively, the top 10 holdings account for approximately 62% of the ETF. As such, the performances of these companies can have a sizeable influence on the ETF’s overall returns.

The ETF pays dividends quarterly, with its annual payout generally trending upwards over the last 5 years. The only exception was 2025, when the distribution slipped by approximately 1.7% compared with the previous year:

US$1.7543 (2021) → US$1.8413 (2022) → US$1.8923 (2023) → US$2.1755 (2024) → US$2.1388 (2025)

Investors who bought the ETF at its opening price of US$67.42 on 04 January 2021 and remained invested until 31 December 2025, when it closed at US$77.68, would have enjoyed a capital gain of approximately 15%, translating to a CAGR of about 2.9%.

8. Real Estate Select Sector SPDR ETF (NYSE ARCA: XLRE)

The Real Estate Select Sector SPDR ETFprovides exposure to real estate companies within the S&P 500, predominantly REITs that own assets such as warehouses, data centres, residential properties, shopping malls, and healthcare properties.

Among its holdings, Welltower Inc is the only company with a weightage above 10%, at approximately 11.1%.

The other major holdings include Prologis Inc, Equinix Inc, American Tower Corporation, Simon Property Group Inc, Digital Realty Trust Inc, Public Storage, Ventas Inc, Realty Income Corporation, and CBRE Group Inc.

Together, the top 10 holdings make up around 60.5% of the ETF. This means that the Real Estate Select Sector SPDR ETF is another sector ETF where the performance of its largest companies can have a significant impact on the overall ETF.

Unitholders receive dividends once every quarter. However, annual distributions have been relatively uneven over the past 5 years:

US$1.3540 (2021) → US$1.3654 (2022) → US$1.3265 (2023) → US$1.3958 (2024) → US$1.3918 (2025)

As far as capital appreciation is concerned, an investor who bought the ETF at its opening price of US$36.64 on 04 January 2021 and held it until the end of 2025, when it closed at US$40.35, would still have enjoyed an unrealised gain of approximately 10%, equivalent to a CAGR of about 2%.

Compared with some of the other sector ETFs discussed in this post, however, its capital appreciation over the period was relatively modest.

9. Utilities Select Sector SPDR ETF (NYSE ARCA: XLU)

The Utilities Select Sector SPDR ETF invests in companies providing essential services such as electricity, natural gas, and water.

Companies in the utilities sector are generally regarded as more defensive, as demand for these essential services tends to remain relatively stable regardless of whether the economy is doing well or going through a slowdown.

Looking at its top holdings, NextEra Energy Inc has the largest weightage, at approximately 13%. The remaining major constituents, including The Southern Company, Duke Energy Corporation, Constellation Energy Corporation, American Electric Power Company Inc, Dominion Energy Inc, Sempra, Entergy Corporation, Xcel Energy Inc, and Vistra Corporation, each have a weightage of no more than 7.7%.

Collectively, the top 10 holdings account for close to 58% of the ETF, meaning their performances can have a significant impact on the ETF.

Dividend-wise, the ETF pays investors once every quarter, and its annual distribution has increased consistently over the past 5 years:

US$0.9999 (2021) → US$1.0293 (2022) → US$1.0726 (2023) → US$1.1211 (2024) → US$1.1573 (2025)

This steady growth is consistent with the tendency of many utility companies to gradually increase their dividends over time. In recent years, some utility companies have also benefited from growing electricity demand, including demand arising from the expansion of data centres and artificial intelligence infrastructure.

From a capital appreciation perspective, investors who bought the ETF at its opening price of US$31.41 on 04 January 2021 and held it until 31 December 2025, when it closed at US$42.69, would have enjoyed an unrealised capital gain of close to 40%, or a CAGR of approximately 6.3%.

10. Health Care Select Sector SPDR ETF (NYSE ARCA: XLV)

The Health Care Select Sector SPDR ETF invests in major pharmaceutical, biotechnology, medical-equipment, and healthcare-service companies within the S&P 500.

Eli Lilly and Company and Johnson & Johnson stand out as the 2 largest holdings, with weightages of approximately 15.5% and 10.5%, respectively.

Together, they account for approximately 26% of the ETF, which means movements in their share prices can have a notable impact on the ETF’s overall performance.

The remaining top holdings (AbbVie Inc, UnitedHealth Group Incorporated, Merck & Co Inc, Thermo Fisher Scientific Inc, Amgen Inc, Abbott Laboratories, Gilead Sciences Inc, and Pfizer Inc) each have a weightage of below 7.6%.

Collectively, the ETF’s top 10 holdings make up close to 61% of the ETF.

Investors receive dividends quarterly, and its annual distribution has increased consistently over each of the past 5 years:

US$1.8724 (2021) → US$1.9925 (2022) → US$2.1688 (2023) → US$2.2944 (2024) → US$2.4766 (2025)

For an investor who bought the ETF at its opening price of US$113.88 on 04 January 2021 and stayed invested until the end of 2025, when it closed at US$154.80, the investment would have recorded a capital gain of approximately 36%, translating to a CAGR of around 6.3%.

11. Consumer Discretionary Select Sector SPDR ETF (NYSE ARCA: XLY)

Finally, the Consumer Discretionary Select Sector SPDR ETF invests in businesses selling products and services that consumers generally spend more on when they have greater disposable income.

These include businesses involved in online shopping, automobiles, restaurants, hotels, home improvement, and other non-essential consumer spending.

In terms of holdings, the ETF is particularly concentrated in 2 companies – Amazon Inc and Tesla Inc, with respective weightages of approximately 25.6% and 14.7%.

Together, these 2 Magnificent Seven companies account for approximately 40.3% of the ETF. As a result, their share-price performances can have a very significant impact on the ETF’s overall performance.

None of the remaining constituents has a weightage exceeding 5.5%.

The top 10 holdings collectively account for close to 68% of the ETF, with the other major holdings including The Home Depot Inc, McDonald’s Corporation, The TJX Companies Inc, Booking Holdings Inc, Starbucks Corporation, Lowe’s Companies Inc, Marriott International Inc, and Ross Stores Inc.

The ETF distributes dividends once every quarter, and its annual payout has increased every year over the past 5 years:

US$0.5433 (2021) → US$0.6444 (2022) → US$0.6951 (2023) → US$0.8084 (2024) → US$0.9481 (2025)

On capital appreciation, investors who bought the ETF at its opening price of US$80.36 on 04 January 2021 and remained invested until 31 December 2025, when it closed at US$119.41, would have enjoyed an unrealised gain of approximately 49%, translating to a CAGR of about 8.2%.

Closing Thoughts

This has been quite a lengthy post, so before I conclude, let me summarise some of the key takeaways.

First, all 11 sector ETFs provide investors with a convenient way to gain exposure to a particular segment of the S&P 500 without having to select individual companies themselves.

Their performances, however, can differ significantly depending on the economic environment and the sectors they are exposed to. Over the 5-year period between 2021 and 2025, some sectors delivered substantially stronger capital appreciation than others, with energy and technology among the stronger performers.

Second, all 11 ETFs pay dividends on a quarterly basis. However, their dividend growth profiles are not the same.

Among the ETFs covered in this post, the Industrial Select Sector SPDR ETF (NYSE ARCA: XLI), Technology Select Sector SPDR ETF (NYSE ARCA: XLK), Utilities Select Sector SPDR ETF (NYSE ARCA: XLU), Health Care Select Sector SPDR ETF (NYSE ARCA: XLV), and Consumer Discretionary Select Sector SPDR ETF (NYSE ARCA: XLY) recorded year-on-year increases in their annual dividend payouts throughout the 5-year period.

Another important point to take note of is that investing in a sector ETF does not automatically mean you are getting a highly diversified portfolio of companies.

Take the Consumer Discretionary Select Sector SPDR ETF as an example. Amazon Inc and Tesla Inc alone make up approximately 40.3% of the ETF. Similarly, Nvidia Corporation, Apple Inc, and Microsoft Corporation collectively account for around 36.5% of the Technology Select Sector SPDR ETF.

Looking across all 11 ETFs, I also noticed that their top 10 holdings generally account for a sizeable proportion of the entire ETF – in many cases somewhere between 40% and 60% or more.

What this means is that even though you may be investing through an ETF, its performance can still be heavily influenced by a relatively small number of companies. This is something investors should keep in mind, particularly if one of the reasons for investing in ETFs is diversification.

Ultimately, sector ETFs can be useful for investors who have a stronger conviction towards certain parts of the economy and would like to express that view without having to select individual stocks.

However, because a sector ETF is naturally less diversified than an ETF tracking the entire S&P 500, investors should first understand the characteristics of the sector they are investing in, the concentration of the ETF’s largest holdings, as well as how the sector may perform under different economic conditions before making an investment decision.

Disclaimer: At the time of writing, I do not own units in any of the 11 sector ETFs mentioned in this post.

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