The SPDR S&P Insurance ETF (
KIE Quick Quote KIE - Free Report) made its debut on 11/08/2005, and is a smart beta exchange traded fund that provides broad exposure to the Financials ETFs category of the market. What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $519.43 million, this makes it one of the average sized ETFs in the Financials ETFs. KIE is managed by State Street Global Advisors. This particular fund, before fees and expenses, seeks to match the performance of the S&P Insurance Select Industry Index.
The S&P Insurance Select Industry Index represents the insurance segment of the S&P Total Market Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for KIE, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.96%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
KIE's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.
Taking into account individual holdings, Trupanion Inc. (
TRUP Quick Quote TRUP - Free Report) accounts for about 2.34% of the fund's total assets, followed by Arthur J. Gallagher & Co. ( AJG Quick Quote AJG - Free Report) and Globe Life Inc. ( GL Quick Quote GL - Free Report) .
KIE's top 10 holdings account for about 21.66% of its total assets under management.
Performance and Risk
The ETF has lost about -5.83% so far this year and is up roughly 0.75% in the last one year (as of 08/02/2022). In the past 52-week period, it has traded between $35.92 and $42.60.
KIE has a beta of 0.88 and standard deviation of 29.94% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 54 holdings, it effectively diversifies company-specific risk.
SPDR S&P Insurance ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco KBW Property & Casualty Insurance ETF (
KBWP Quick Quote KBWP - Free Report) tracks KBW Nasdaq Property & Casualty Index and the iShares U.S. Insurance ETF ( IAK Quick Quote IAK - Free Report) tracks Dow Jones U.S. Select Insurance Index. Invesco KBW Property & Casualty Insurance ETF has $200.68 million in assets, iShares U.S. Insurance ETF has $328.86 million. KBWP has an expense ratio of 0.35% and IAK charges 0.42%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials ETFs.
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.