Amid market volatility, many investors have been looking for more strategic ways to avoid the obvious risks and seek out focused opportunities. If you’re among those looking for an easy way to invest in a specific part of the stock market without having to pick individual stocks, sector ETFs can be a smart place to start.
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These funds let you invest in groups of companies that all operate in the same industry, whether that’s , healthcare, energy or consumer goods. Some sectors like technology tend to perform well during periods of economic growth, while others like can help provide stability when markets get rocky.
Based on your personal and investing needs, a layer of sector ETFs can help refine your portfolio in simple but effective ways. If such an approach is appealing, the best place to start is with one of these top sector ETFs to buy now:
| ETF | Expense ratio | Assets under management |
| State Street Consumer Discretionary Select Sector SPDR ETF (ticker: ) | 0.08% | $22.9 billion |
| State Street Consumer Staples Select Sector SPDR ETF () | 0.08% | $14.4 billion |
| State Street Energy Select Sector SPDR ETF () | 0.08% | $36.3 billion |
| State Street Financial Select Sector SPDR Fund () | 0.08% | $54.4 billion |
| State Street Health Care Select Sector SPDR Fund () | 0.08% | $42.5 billion |
| State Street Industrial Select Sector SPDR Fund () | 0.08% | $33.9 billion |
| Vanguard Information Technology ETF () | 0.09% | $169.3 billion |
| Vanguard Real Estate ETF () | 0.13% | $71.4 billion |
| State Street Materials Select Sector SPDR ETF () | 0.08% | $8.4 billion |
| State Street Utilities Select Sector SPDR ETF () | 0.08% | $23.8 billion |
| State Street Communication Services Select Sector SPDR Fund () | 0.08% | $23.2 billion |
State Street Consumer Discretionary Select Sector SPDR ETF ()
Consumer discretionary companies sell products and services that people want but don’t necessarily need. Think of businesses that sell cars, run vacation properties or offer non-essential services like streaming media. Obviously, these stocks all do best when consumers are confident and eager to spend more. XLY is the largest ETF focused on this sector, with around 50 leading companies like e-commerce giant Amazon.com Inc. (AMZN), home improvement icon Home Depot Inc. () and EV automaker Tesla Inc. ().
State Street Consumer Staples Select Sector SPDR ETF ()
In contrast to discretionary items, consumer staples are the everyday products people buy no matter what’s happening in the economy. Think groceries, toothpaste, soap and diapers. XLP invests in about 40 of the largest companies that make and sell these essential products. Its holdings include consumer products giant Procter & Gamble Co. (), which owns familiar brands like Tide and Pampers, along with retailers like Walmart Inc. () that people rely on for everyday shopping.
State Street Energy Select Sector SPDR ETF ()
The has been in focus in 2026 amid the Iran war. XLE is the largest and simplest way to gain exposure to this corner of the market. This sector ETF includes companies that produce oil and natural gas, along with businesses that provide equipment and services to support energy production. While are part of the sector, the largest traditional oil and gas companies still dominate most broad energy ETFs. The fund holds about 20 of the industry’s biggest players, including Exxon Mobil Corp. () and Chevron Corp. ().
State Street Financial Select Sector SPDR Fund ()
The includes banks, insurance companies, investment firms and payment processors that keep the economy moving. This sector can be cyclical based on economic activity as well as the interest rate environment, since that is tied to the profitability of loans. XLF owns roughly 70 of the largest financial companies in the U.S., including investment icon Berkshire Hathaway Inc. (), megabank JPMorgan Chase & Co. () and digital payments leader Visa Inc. ().
State Street Health Care Select Sector SPDR Fund ()
Healthcare is one of the market’s most innovative sectors, as it includes and medical device manufacturers working on the next generation of cures. It is also relatively low-risk, as health insurers and hospitals see strong demand from “customers” regardless of economic conditions. For many investors, healthcare offers a mix of stability and growth potential — and XLV is the largest sector fund out there to tap into these stocks. Top positions among its roughly 60 holdings include drugmaker Eli Lilly & Co. () and diversified medical megacap Johnson & Johnson (JNJ).
State Street Industrial Select Sector SPDR Fund ()
The industrial sector is made up of companies that help keep the economy moving, from building heavy equipment to transporting goods. Because these businesses depend on economic activity, they tend to do well when the economy is growing and can slow down during . Many of the companies in this sector also do business around the world, so global trade can have a big impact on their performance. XLI holds nearly 80 companies, including well-known names like GE Aerospace (), heavy equipment leader Caterpillar Inc. () and rail icon Union Pacific Corp. ().
Vanguard Information Technology ETF ()
Technology is one of the biggest and fastest-growing parts of the U.S. stock market. VGT gives investors access to more than 300 tech companies, including giants like Microsoft Corp. (MSFT), Apple Inc. (AAPL) and Nvidia Corp. (NVDA). If you believe technology will continue to play a major role in everyday life and business, this ETF offers a simple way to invest in the sector’s long-term growth potential. Keep in mind, however, that despite a much bigger list of stocks than other ETFs on this list, about 60% of all assets are in the top 10 positions of this sector ETF, so it may not be as diversified as it first appears.
Vanguard Real Estate ETF ()
VNQ invests in , which are companies that own and manage properties. REITs are popular with investors looking for regular dividend income because they pay out most of their profits to shareholders. On the flip side, they can struggle when interest rates are high since real estate companies often borrow money to buy and manage properties. VNQ owns a stake in more than 150 real estate companies, including warehouse owner Prologis Inc. (), cell tower operator American Tower Corp. () and senior housing company Welltower Inc. ().
State Street Materials Select Sector SPDR ETF ()
The materials sector includes companies that produce the raw materials used to make everything from buildings and cars to electronics and household products. That includes chemicals, metals, mining and construction materials. XLB owns nearly 30 companies, including industrial gases leader Linde PLC (), paint giant Sherwin-Williams Co. () and megaminer Newmont Corp. (). Like other parts of the economy tied to manufacturing and construction, this sector tends to rise and fall with overall economic demand but can also be tied to raw materials prices in commodity markets.
State Street Utilities Select Sector SPDR ETF ()
provide essential services like electricity and natural gas, so they tend to have steady businesses regardless of what’s happening in the economy. That’s one reason many investors see utilities as a more stable part of the stock market. XLU owns about 30 utility companies, including leaders NextEra Energy Inc. (), Southern Co. () and Duke Energy Corp. (). As these giants are effectively regional monopolies with high barriers to competition, XLU is a popular choice for investors looking for reliable dividend income and lower volatility than growth-oriented sectors.
State Street Communication Services Select Sector SPDR Fund ()
The communications sector has changed a lot over the years. It still includes traditional phone companies like AT&T Inc. () and Verizon Communications Inc. (VZ), but today it also includes digital leaders like Google parent Alphabet Inc. () and Facebook parent Meta Platforms Inc. (). Investors looking for a mix of traditional communications companies and fast-growing internet businesses may find this ETF appealing, particularly if the communications applications of AI are more interesting to you than the hardware manufacturers.
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Update 07/08/26: This story was published at an earlier date and has been updated with new information.
