More than half of the sectors comprising the

S&P 500

lost money in the first quarter. Oddly enough, though, that hasn't stopped investors from gobbling up shares of the exchange traded funds that track the benchmark index.

The S&P began the year on a strong downward trend before reversing itself in late January. The upward momentum in stocks continued until early March, when rising oil prices and interest rates caused a sharp selloff. The index finished the first quarter down 2.6%.

By quarter-end, five of the nine sectors that comprise the index closed in the red. Those losers, as measured by the select sector SPDR exchange traded funds that track them, included

Health Care

(XLV) - Get Report

, -0.76%;

Industrials

(XLI) - Get Report

, -1.72%;

Consumer Discretionary

(XLY) - Get Report

, -5.9%;

Financials

(XLF) - Get Report

, -6.5%; and

Technology

(XLK) - Get Report

, -7.34%.

Considering the run-up in oil and oil-related stocks, it was no surprise that the

Energy

(XLE) - Get Report

, which is overweight oil giants like

Exxon Mobil

(XOM) - Get Report

and

ChevronTexaco

(CVX) - Get Report

, was the best-performing ETF, rocketing up 18.4%. The other three winners for the quarter, which rose modestly, included

Materials

(XLB) - Get Report

,

Consumer Staples

(XLP) - Get Report

and

Utilities

(XLU) - Get Report

.

Yet those woes didn't dissuade investors from piling into them. According to Select Sector SPDRs, the net assets for the combined nine SPDRs rose 11% for the three-month period, to $10.4 billion from $9.4 billion at the end of 2004.

As would be expected, the energy SPDR, or XLE, saw the greatest asset growth, with $486 million heading into it, raising its asset base by 31% to $2 billion. Consumer discretionary, XLY, and Technology, XLK, were the two biggest losers, shedding 23% and 16% respectively.

"Tech's most recent fall has been the continuation of a long slide as a percentage of total trust assets," says Dan Dolan, a director at Select SPDRs. "People have diversified away from tech and it looks like the energy has benefited from the move."

Technology stocks make up 18% of the total S&P 500, nearly double energy's share.

Microsoft

(MSFT) - Get Report

and

IBM

(IBM) - Get Report

combine for more than 20% of the XLK.

The net new shares of Select Sector SPDRs created rose by 8.16%, or 26.9 million. Financials, tracked by the XLF, led the way, growing by 40% for the quarter. ETF shares are created and redeemed based on demand similar to shares of an open-end mutual fund.

"Institutional and individual interest continues to grow, with weekly trading volume exceeding 100 million shares in March," says Dolan. "I think investors are starting to use sector ETFs not only as an alternative to mutual funds but now an alternative to stocks, especially in light of recent blowups at so-called blue-chips like

Merck

(MRK) - Get Report

and

AIG

(AIG) - Get Report

."