The 2 highest yielding S&P 500 sector ETFs are Q3’s worst performers

The two worst performing S&P 500 sectors during the third quarter were utilities and real estate investment trusts, as a jump in Treasury yields made those high-yielding sectors less attractive despite their usual safe-haven status. The Utilities Select Sector SPDR

XLU

dropped 10.3% since the end of June and the Real Estate Select Sector SPDR ETF

XLRE

sank 9.9%, while the S&P 500

SPX

shed 3.9%. Given the ETFs’ high yields and the component companies’ usually steady earnings, they often outperform during times of market volatility and weakness. But with the yield on 10-year Treasurys

TMUBMUSD10Y

reaching a 16-year high earlier this week, the yields on the ETFs pale in comparison. The REIT ETFs yield in recent trading was 3.90% and the utilities ETF’s yield was 3.61%, which compares with the implied yield for the S&P 500 of 1.62% and the 10-year Treasury yield of 4.567%.