Services Sector ETF

DEFINITION of 'Services Sector ETF'

Exchange-traded funds (ETFs) that invest in either the consumer services sector or financial services sector of an economy. A consumer services ETF seeks to derive investment results that correspond to an underlying index of companies that provide products and services to consumers. A financial services ETF aims to derive investment results that track an underlying index of financial service providers such as banks and credit-card issuers.

BREAKING DOWN 'Services Sector ETF'

Since consumer spending accounts for a major part of most economies, the investment returns from a consumer services ETF would depend on the prevailing level of consumer sentiment, and hence consumer spending, in an economy. A consumer services ETF would generally include a wide range of companies that provide consumer goods and services, from cable providers and drugstore chains to hotel and retailers (both online and bricks-and-mortar).



The investment returns from a financial services ETF are dependent on the performance of the financial sector, which is also closely tied to the performance of the broad economy. Such an ETF would include banks, trusts companies, asset managers, credit-card issuers and other providers of financial services.

RELATED TERMS
  1. ETF Of ETFs

    An exchange-traded fund (ETF) that tracks other ETFs rather than ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Retail Industry ETF

    An exchange-traded fund that invests in companies whose main ...
  4. Sector ETF

    A class of exchange-traded fund that invests in the stocks and ...
  5. Index ETF

    Exchange-traded funds that follow a specific benchmark index ...
  6. Stock ETF

    A security that tracks a particular set of equities, similar ...
Related Articles
  1. Mutual Funds & ETFs

    How To Pick The Best ETF

    Of the hundreds of exchange-traded funds on the market, some are bound to fail. Learn how to pick the best of the bunch.
  2. Investing Basics

    The Advantages of ETFs Compared to Index Funds

    With the ongoing ETF boom, ETFs gain more variety and increased competition in the market leads to further investors' advantages compared to index funds.
  3. Mutual Funds & ETFs

    Exchange-Traded Funds: Conclusion

    Although the first exchange-traded funds (ETFs) were designed to track broad market stock indexes, since that time, ETFs have been developed to track industrial sectors, investment styles, fixed ...
  4. Mutual Funds & ETFs

    PGF Vs. KBE: Comparing Financials ETFs

    Compare two financial sector ETFs that offer a specific banking industry focus: the PowerShares Financial Preferred ETF and the SPDR S&P Bank ETF.
  5. Mutual Funds & ETFs

    XLF Vs. KRE: Comparing Financials ETFs

    Analyze two SPDR financials exchange-traded funds, and learn about the similarities and differences between these ETFs.
  6. Top ETFs and What They Track: Introduction to ETFs

    Investopedia explains: An Exchange-Traded Fund (ETF) is an investment fund that tracks an index, specific asset or basket of assets to which it is pegged.
  7. Financial Advisors

    Why You Should Avoid Some ETFs

    Despite the popularity of ETFs, not every one is a solid bet, and not every ETF is built to last. Here's what an investor should consider.
  8. Mutual Funds & ETFs

    Exchange-Traded Funds: Introduction

    Exchange-traded funds (ETFs) can be a valuable component for any investor's portfolio, from the most sophisticated institutional money managers to a novice investor who is just getting started. ...
  9. Mutual Funds & ETFs

    Guide To ETF Providers: Introduction

    Exchange traded funds (ETFs) are uniquely structured investment products that track indexes, or baskets of assets, including stocks, bonds, currencies, real estate and commodities. Because ETFs ...
  10. Mutual Funds & ETFs

    Exchange-Traded Funds: Equity ETFs

    The first ETF was developed to create diversified portfolios based on equity indexes. Because equities are a core asset class for investment portfolios, it is important for investors to understand ...
RELATED FAQS
  1. What distinguishes the financial services sector from the banks?

    Learn about the difference between the banking industry and the financial services sector and how to distinguish financial ... Read Answer >>
  2. What are the most common ETFs that track the banking sector?

    Learn about common bank ETFs, and find out which ones focus on the international financial sector, big banks, regional banks ... Read Answer >>
  3. What are the main reasons an investor should consider an allocation to the banking ...

    Learn about investment opportunities in the commercial and investment banking industry. Find out why many investors choose ... Read Answer >>
  4. Do ETFs pay capital gains?

    Learn about exchange-traded funds (ETFs), which can generate capital gains for their shareholders due to occasional and substantial ... Read Answer >>
  5. Is there an ETF composed of other ETFs?

  6. Are ETFs required to pay out a percentage of income as dividends?

    The exchange-traded fund (ETF) is a relatively new investment vehicle, hitting the market in 1993. A fund company can create ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center