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Is SPDR S&P Semiconductor ETF (XSD) a Strong ETF Right Now?
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A smart beta exchange traded fund, the SPDR S&P Semiconductor ETF (XSD - Free Report) debuted on 01/31/2006, and offers broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by State Street Global Advisors, XSD has amassed assets over $1.22 billion, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, XSD seeks to match the performance of the S&P Semiconductor Select Industry Index.
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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.12%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 100% of the portfolio.
When you look at individual holdings, Sunpower Corporation (SPWR - Free Report) accounts for about 3.96% of the fund's total assets, followed by Wolfspeed Inc (WOLF - Free Report) and Silicon Laboratories Inc. (SLAB - Free Report) .
XSD's top 10 holdings account for about 32.37% of its total assets under management.
Performance and Risk
The ETF has lost about -23.31% so far this year and is up about 2.83% in the last one year (as of 03/16/2022). In the past 52-week period, it has traded between $158.58 and $248.86.
The fund has a beta of 1.26 and standard deviation of 37.61% for the trailing three-year period, which makes XSD a high risk choice in this particular space. With about 42 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Semiconductor ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Semiconductor ETF has $8.11 billion in assets, iShares Semiconductor ETF has $8.13 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is SPDR S&P Semiconductor ETF (XSD) a Strong ETF Right Now?
A smart beta exchange traded fund, the SPDR S&P Semiconductor ETF (XSD - Free Report) debuted on 01/31/2006, and offers broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by State Street Global Advisors, XSD has amassed assets over $1.22 billion, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, XSD seeks to match the performance of the S&P Semiconductor Select Industry Index.
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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.12%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 100% of the portfolio.
When you look at individual holdings, Sunpower Corporation (SPWR - Free Report) accounts for about 3.96% of the fund's total assets, followed by Wolfspeed Inc (WOLF - Free Report) and Silicon Laboratories Inc. (SLAB - Free Report) .
XSD's top 10 holdings account for about 32.37% of its total assets under management.
Performance and Risk
The ETF has lost about -23.31% so far this year and is up about 2.83% in the last one year (as of 03/16/2022). In the past 52-week period, it has traded between $158.58 and $248.86.
The fund has a beta of 1.26 and standard deviation of 37.61% for the trailing three-year period, which makes XSD a high risk choice in this particular space. With about 42 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Semiconductor ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index. VanEck Semiconductor ETF has $8.11 billion in assets, iShares Semiconductor ETF has $8.13 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.