Launched on 01/31/2006, the SPDR S&P Semiconductor ETF (
XSD Quick Quote XSD - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Semiconductors segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.06 billion, making it one of the average sized ETFs attempting to match the performance of the Technology - Semiconductors segment of the equity market. XSD seeks to match the performance of the S&P Semiconductor Select Industry Index before fees and expenses.
The S&P Semiconductor Select Industry Index represents the Semiconductor sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Semiconductor Index is a modified equal weight index.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.14%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 100% of the portfolio.
Looking at individual holdings, Advanced Micro Devices Inc. (
AMD Quick Quote AMD - Free Report) accounts for about 2.87% of total assets, followed by Nvidia Corporation ( NVDA Quick Quote NVDA - Free Report) and First Solar Inc. ( FSLR Quick Quote FSLR - Free Report) .
The top 10 holdings account for about 27.62% of total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Semiconductor ETF return is roughly 16.89% so far, and it's up approximately 56.36% over the last 12 months (as of 08/27/2021). XSD has traded between $117.63 and $200.80 in this past 52-week period.
The ETF has a beta of 1.24 and standard deviation of 36.46% for the trailing three-year period, making it a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.
SPDR S&P Semiconductor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XSD is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
VanEck Vectors Semiconductor ETF (
SMH Quick Quote SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF ( SOXX Quick Quote SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Vectors Semiconductor ETF has $6.15 billion in assets, iShares Semiconductor ETF has $7.23 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%. Bottom Line
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