The SPDR S&P 500 ETF Trust (SPY) is one of the most popular ETFs (Exchange Traded Funds) for diversifying risk and owning the hottest stocks listed on the S&P 500 Index (SPX). The SPY, which tracks the SPX, gained about 1.4% in the past week. However, it lagged the Technology Select Sector SPDR Fund (XLK) and the Communication Services Select Sector SPDR Fund (XLC), which increased by about 3.67% and 3.30%, respectively, during the same period.
While the broader markets have remained somewhat resilient so far this year, the top tech stocks have outperformed the benchmark index by a significant margin. The moderation in the inflation rate, cost-saving initiatives, and attractive valuations have led to a recovery in tech stocks.
As for XLC, the continued uptrend in the shares of its three top holdings, including Meta (NASDAQ:META), Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), and Netflix (NASDAQ:NFLX), led to its outperformance.
Further, on a year-to-date basis, the XLK and XLC ETFs have gained 27.07% and 29.48%, respectively. This compares favorably to the SPY’s year-to-date gain of 9.93%.
Even though the SPY ETF has lagged behind XLC and XLV, it offers more diversification and stability than the other.
Additionally, SPY stock has an Outperform Smart Score of eight on TipRanks compared to the XLC’s Neutral Smart Score of seven. Like SPY, XLK commands an Outperform Smart Score of eight. However, with over 500 holdings across multiple sectors and a low expense ratio of 0.05, SPY remains a solid long-term bet.
