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New State Street Sector ETFs Give Biggest Stocks Full Weight

BY | ETF Database
10/14/2026 | 42 VIEWS
State Street Investment Management launched four sector ETFs on Wednesday, built to give each sector’s largest companies their full weight.Key Takeaways: XLKM aims to give Nvidia 20.93%, compared with 15.41% in its Select Sector counterpart, XLK. Each Market Sector fund holds its Select Sector counterpart, then buys extra shares of the biggest companies. Amazon makes up 23.54% of XLY, while XLYM aims to hold it at 43.23%. Called the State Street S&P 500 Market Sector SPDR ETFs, they cover tech, consumer discretionary, consumer staples and energy. Each charges an annual fee of 0.12%, according to State Street. Sector ETFs hold companies from one slice of the stock market, such as tech or energy. State Street launched the first suite of them in 1998, with its Select Sector SPDR ETFs, according to the firm. The Market Sector funds track S&P 500 sector indexes that don’t cap any one company’s weight. The goal is “reflecting the full weight of the largest companies in each sector,” according to the press release. Their Select Sector counterparts follow indexes that can trim those giants. “Today, sectors are increasingly used as building blocks in asset allocation and model portfolios,” said Anna Paglia, chief business officer at State Street Investment Management. “These new ETFs give investors another way to put their views into practice, with exposure designed to more closely reflect the market cap weighting of the S&P 500 sector indexes.”Select Sector ETFs Form the Core of Each New FundThe Select Sector funds trim their giants to meet IRS diversification rules, the prospectuses note. To give those companies more room, each Market Sector fund holds its Select Sector counterpart as a base. It then buys shares of the biggest companies on its own to make up the difference. Take the State Street S&P 500 Technology Market Sector SPDR ETF XLKM. Its base, the State Street Technology Select Sector SPDR ETF (XLK A), made up 66.59% of assets on October 13, according to State Street’s website. See more: XLK Hits New All-Time High as Tech Triumphs Nvidia Corp. (NVDA) made up 15.41% of XLK but 20.93% of XLKM’s index. XLKM gets Nvidia two ways, State Street data show. Its XLK stake works out to about 10.3% in Nvidia. XLKM also buys Nvidia shares on its own, adding another 10.66%. Together, that comes to roughly 20.9%, matching the index. Apple Inc. (AAPL) and Microsoft Corp. (MSFT) work the same way, according to State Street. They made up 18.85% and 15.27% of XLKM’s index, compared with 13.88% and 11.25% of XLK.Amazon, Walmart and Exxon Show the Sector GapThe other three Market Sector funds use the same approach. The gap is widest in consumer discretionary. There, the State Street S&P 500 Consumer Discretionary Market Sector SPDR ETF XLYM aims to hold Amazon.com Inc. (AMZN) at 43.23%. Amazon was just 23.54% of its Select Sector counterpart, the State Street Consumer Discretionary Select Sector SPDR ETF (XLY A), according to State Street. To close the gap, XLYM held 63.82% of its assets in XLY. It also bought Amazon shares on its own, adding 17.81%, plus Amazon options contracts. In staples, the State Street S&P 500 Consumer Staples Market Sector SPDR ETF XLPM faces a similar gap. It aims to hold Walmart Inc. (WMT) and Costco Wholesale Corp. (COST) at 16.31% and 13.8%, according to State Street. That compares with 10.75% and 9.1% in the+* State Street Consumer Staples Select Sector SPDR ETF*+ (XLP A). XLPM leaned least on its base, with XLP making up just 51.92% of its assets. Finally, the State Street S&P 500 Energy Market Sector SPDR ETF XLEM leaned most on its base. That fund, the State Street Energy Select Sector SPDR ETF (XLE A), made up 84.81% of assets, according to State Street. Still, the top of the energy sector shows a gap. XLEM targets 29.26% for ExxonMobil Holdings Corp. (XOM), compared with 23.56% in XLE. See more: Energy Leads State Street Premium Income ETF Returns, FlowsA Third Option in State Street's Sector LineupThe Market Sector funds join two other State Street sector lineups, according to the release. Select Sector SPDR ETFs focus on liquidity and diversified exposure, while Sector Premium Income ETFs aim to generate income. Combined, those two lineups held $393.6 billion as of August 31, according to the release. The four Market Sector funds started much smaller, with about $500,000 each on October 13, according to State Street’s website. For more news, information, and analysis, visit our Sector Investing Content Hub.

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