2023 Mid-Year Review of Stock-Based ETFs

With the first half of 2023 now past, we devote this post to a mid-year review of ETFs in a variety of stock sectors within the S&P 500. As we will see, while this broad market index of large-cap stocks did well, there was significant variation in returns across the sectors of the S&P 500.

Sectors of the S&P 500

There are 11 sectors in the S&P 500 as shown below. While some of these sectors have several ETFs tracking them, we choose the ETFs in parentheses due to their long history in the markets.

  • Information Technology (XLK)
  • Health Care (XLV)
  • Financials (XLF)
  • Consumer Discretionary (XLY)
  • Communication Services (XTL)
  • Industrials (XLI)
  • Consumer Staples (XLP)
  • Energy (XLE)
  • Utilities (XLU)
  • Real Estate (IYR)
  • Materials (XLB)

Using this list and reinvesting dividends, we see that some sectors had total returns that did very well in the first half of 2023, and several did not.

2023 mid-year review of S&P 500 sector ETFs
2023 Mid-year review of S&P 500 sector ETFs. Total Returns. Source: https://www.etfreplay.com/charts.aspx

2023 mid-year sector winners

As the figure shows, the technology and consumer discretionary sectors had the highest total return so far in 2023. In retrospect, the technology sector gains were possibly fueled by sector layoffs that didn’t appear to hurt the investor’s view of the future profitability of this sector. Similarly, future expected consumer discretionary spending gave investors significant confidence in this sector. And, overall, the S&P 500 gained nearly 17% in the first half of 2023. At this rate, the effect of the 3rd year in a presidential cycle on stocks may remain true in 2023.

Losses in the first half of 2023

The energy and utility sectors were the worst-performing sectors of the S&P 500 in the first half of 2023. With increasing interest rates, long-term investments by these sector participants are becoming increasingly expensive. So, it appears that investors don’t see strong prospects for profitability in these sectors.

ETFMathGuy is a subscription-based education service for investors interested in using commission-free ETFs in efficient portfolios.
ETFMathGuy is a subscription-based education service for investors interested in tax-efficient investing with ETFs

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