Core Viewpoint - December is historically a favorable month for stocks, with the S&P 500 averaging a gain of 0.6% over the past 20 years, but the Financial Select Sector SPDR ETF (XLF) may face increased risks as the month progresses [1][2]. ETF Performance and Historical Context - The Financial Select Sector SPDR ETF has increased by nearly 3% month-to-date and has averaged a December gain of 1.47% since 2010, indicating that December weakness is not typical for this fund [4][5]. Holdings and Sector Risks - U.S. Bancorp and Moody's, significant holdings in the ETF, have historically underperformed in the latter half of December, which could pose risks to the ETF's performance [6]. - The recent Federal Reserve interest rate cuts may negatively impact banks and insurance companies, which constitute over 40% of the ETF's holdings, leading to potential lower returns [8][9]. - A decrease in consumer holiday spending could adversely affect the ETF, as four of the top five U.S. credit card issuers are among its top holdings [9]. Key Holdings and Leadership Changes - Berkshire Hathaway is the largest holding in the ETF, accounting for 11.6% of its weight, but its performance has been hampered this year, with shares only up 9.21% [10]. - The retirement of CEO Warren Buffett and recent executive departures at Berkshire could introduce additional challenges for the ETF in December [11].
1 Risky ETF to Avoid Buying in December