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.

Investopedia explains '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.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.
  2. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  3. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  4. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
  5. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
  6. Family Limited Partnership - FLP

    A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.
Trading Center