Yield, Sector and Risk: A Snapshot of U.S. Sector ETFs – As of May 2025

Star Performer: Technology. Major Disappointment: Real Estate. The Sophisticated Investor Looks Beyond Short-Term Returns

A chart shared by the Instagram account ETF.Investments offers a compelling snapshot of U.S. sector ETF performance over the past decade. The data, sourced from TradingView as of May 16, 2025, highlights the significant disparities among different sectors—not just in total returns but also in dividend policies, volatility, and sensitivity to economic cycles.

Technology – Still the Undisputed Leader
The technology sector (XLK) continues to dominate, delivering a remarkable 438.7% return over the past 10 years. Even the 5-year return is exceptional at 143.4%. However, year-to-date (YTD) performance is modest, at just 1.3%. With a low dividend yield (0.67%), this sector clearly prioritizes internal growth and innovation over regular income. It remains a high-growth, high-volatility segment, often priced at a premium.

Real Estate – A Harsh Comeback to Reality
The real estate sector (XLRE) shows a weak 10-year return of just 39.3%, despite an attractive yield of 3.43%. This underperformance suggests that real estate’s traditional role as an inflation hedge has faltered. While the sector has risen 4.3% YTD, it remains one of the laggards in the chart. Rising interest rates have significantly eroded profitability, especially for leveraged real estate investment trusts (REITs).

Healthcare – Temporary Setback or Long-Term Shift?
The healthcare ETF (XLV) is down 3.3% so far this year and has returned just 77.5% over 10 years—an unexpectedly weak performance considering demographic trends and medical innovation. It’s possible that overpricing or regulatory pressures have weighed on the sector. Still, with a dividend yield of 1.81%, it retains defensive characteristics.

Positive Surprises: Industrials and Financials
The industrials ETF (XLI) delivered a robust 125.2% return over the past five years and 152.7% over the last decade, with a solid 9.5% YTD gain. The financial sector (XLF) is not far behind, posting 155.6% over 10 years and 7% YTD. Both sectors are benefiting from economic recovery, strong infrastructure investment, and a favorable interest rate environment—particularly advantageous for banks and lenders.

Energy – High Yield, High Risk
Despite a strong 5-year return (122.1%), the energy sector (XLE) shows a meager 10-year return of 6.6% and is down 1.4% YTD. With ESG pressures and volatile commodity prices, energy remains one of the most unpredictable sectors. However, its dividend yield is among the highest at 3.35%, which may appeal to income-focused investors willing to accept higher risk.

Consumer Sectors – Essential vs. Discretionary
Consumer staples (XLP) gained 4.7% YTD, demonstrating defensive strength with a solid 2.57% yield. In contrast, consumer discretionary (XLY) is down 1.7% YTD, despite posting an impressive 10-year return of 182.9%. In uncertain markets, investors tend to favor essentials over optional spending, which explains the recent divergence.

The Benchmark – S&P 500 as the Baseline
The S&P 500 ETF (VOO) delivered a 10-year return of 180.7%, positioning it squarely in the middle of the pack. Investors who tracked the broad index instead of picking sectors achieved a balanced outcome with lower risk. This may serve as a reminder that passive investing, through broad exposure, can be an effective long-term strategy.

Conclusion: Beyond the Numbers
The chart makes one thing clear—there’s no one-size-fits-all sector, and past performance is no guarantee of future returns. While technology continues to shine, its valuation is stretched. Industrials and financials are benefiting from favorable conditions, while healthcare and real estate are under pressure. Energy remains risky despite its yield. Investors seeking an informed strategy must go beyond performance tables and consider the macroeconomic forces shaping each sector.