5-Year Backtest: Buy and Hold XLF (The Financial Select Sector SPDR Fund)

This analysis evaluates a buy-and-hold strategy over the past 5 years, providing a historical perspective on XLF's performance from 2020-07-06 to 2025-07-03.

Note: This simulation uses adjusted close prices, meaning all historical prices have been retroactively adjusted for splits and dividends. To achieve similar results in practice, you would need to reinvest all dividends automatically as they are paid.

Performance Overview

Starting with an initial capital of $10,000.00, we purchased shares of XLF on 2020-07-06, at a price of $21.38 per share (adjusted for splits and dividends). No trading, no adjustments — just a simple buy-and-hold approach.

We held the position continuously through every market twist and turn, never selling. As of 2025-07-03, the price of XLF had risen to $53.19. While we didn't sell, we can still assess the performance by calculating the current value of the investment: $24,872.93 — a total gain of 148.73%.

This translates into an annualized return of 20.03% over the entire period. This is a very strong return — significantly above what is commonly seen in broad-market performance. It often signals a well-timed entry into a high-growth phase.

Drawdown and Risk

The maximum drawdown recorded during this period was 25.81%. This drawdown began after a peak price of $38.92 on 2022-01-12, and reached its lowest point on 2022-10-12 when the price fell to $28.88. The drawdown lasted for 273 days.

The drawdown was relatively small, suggesting the asset or strategy maintained reasonable stability through market fluctuations. The maximum drawdown lasted over six months, suggesting a sustained downturn or persistent volatility. These periods can shake investor confidence and demand discipline.

The Calmar Ratio — annualized return divided by maximum drawdown — was 0.78, reflecting the tradeoff between return and volatility.

The Calmar Ratio is very strong — significantly better than most long-term investment strategies, indicating efficient risk management.