ProShares S&P 500 Ex-Financials ETF (SPXN)

The ProShares S&P 500 Ex-Financials ETF — ticker SPXN — holds the S&P 500 without banks, insurance companies, or other financial institutions. Removes roughly 60 to 80 stocks depending on sector definitions. What remains: tech, healthcare, industrials, consumer, energy, utilities. Missing: JPMorgan, Bank of America, Goldman Sachs, PayPal, the whole financial system.

The exclusion

Start with S&P 500. Remove everything classified as financial — banks, investment firms, mortgage REITs, insurance. The resulting index is SPXN’s benchmark. Sponsor: ProShares, part of Invesco. Expense ratio: approximately 0.20% annually, low due to index simplicity. Liquidity adequate; widely used in institutional portfolios.

Why exclude financials? Investors cite several rationales. Some believe banks are too risky — concentrated in debt markets, vulnerable to credit cycles, facing regulatory changes. Others see financials as too cyclical; they surge in expansions and crater in recessions. A few distrust Wall Street philosophically. Still others want to avoid the dividend tax treatment of financial stocks, which differs from other sectors.

Performance texture: the financial cycle

Financials are pro-cyclical. When the economy accelerates, banks lend more, earn wider spreads, and stock prices soar. SPXN lags. When the economy slows, banks tighten credit, earnings compress, and financial stocks plummet. SPXN holds up better. This creates volatility in the relative performance: SPXN can outperform the broad index by 10–20% in downturns and underperform by the same margin in strong expansions. An investor in SPXN is not just exclusion-driven but also implicitly predicting financial sector weakness.

Periods when SPXN outpaced the S&P 500 broadly: 2008–2009 financial crisis (banks collapsing, SPXN safe), parts of 2020 (COVID uncertainty, flight to safety), 2022 (interest-rate volatility, bank stress, tech holdoff). Periods when SPXN lagged: 2017–2019 (banks rallying on deregulation and rate expectations), 2021 (post-pandemic recovery, cyclical rotation). The pattern is real and repeatable.

Concentration drift and the tech tilt

SPXN is mathematically equal-weighted to the S&P 500 methodology but has different composition. With financials gone, the relative weight of remaining sectors shifts. Technology gains a larger share of the total. Healthcare stable. Industrials and consumer stable. This means SPXN rode tech’s huge gains in the 2010s and early 2020s — a feature if you like tech, a weakness if you think tech is overvalued. The sector tilt is not intentional on ProShares’ part but is a structural consequence of removing financials from a cap-weighted index.

Hidden leverage and daily moves

SPXN itself is not leveraged. But the sector exclusion creates a hidden form of concentration. A 5% drop in tech stocks moves SPXN more than a 5% drop would move the full S&P 500, because technology is a larger slice of the remainder. On volatile days, this can be dramatic. Conversely, when financials crater and tech holds steady, SPXN outperforms. The leverage is indirect but real.

Research steps

Read ProShares’ fact sheet: top holdings, sector breakdown, performance versus full S&P 500 over one-, three-, five-, and ten-year periods. Look at specific down-market periods — 2008, 2020, 2022 — to see how SPXN protected capital. Overlay this against up-market periods. Track the financial sector’s weight in the broad S&P 500 over time. As banks grow in importance relative to the index, SPXN’s exclusion matters more. Check the prospectus for any changes in what qualifies as “financial.” Understand whether the fund’s underperformance in financial booms costs you more than its outperformance in financial busts saves you, given your own time horizon and risk tolerance.

Fit and trade-offs

SPXN works for investors who believe financial sector stocks are either too risky, too cyclical, or likely to underperform. It also works for those who want to reduce systematic exposure to credit cycles without holding a narrower sector fund. For buy-and-hold investors without a strong view on financials, the S&P 500 is simpler. For those convinced banks are headed for structural decline, a financial-exclusion fund is more elegant than hand-picking from the remaining 420 stocks and updating as index membership changes.