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Is SPDR S&P Semiconductor ETF (XSD) a Strong ETF Right Now?
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The SPDR S&P Semiconductor ETF (XSD - Free Report) made its debut on 01/31/2006, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. XSD has been able to amass assets over $1.12 billion, making it one of the larger ETFs in the Technology ETFs. This particular fund, before fees and expenses, 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.
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 0.35%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 96.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
When you look at individual holdings, Impinj Inc. (PI - Free Report) accounts for about 4.52% of the fund's total assets, followed by First Solar Inc. (FSLR - Free Report) and Wolfspeed Inc (WOLF - Free Report) .
XSD's top 10 holdings account for about 33.84% of its total assets under management.
Performance and Risk
The ETF has lost about -25.97% and is down about -24.10% so far this year and in the past one year (as of 11/25/2022), respectively. XSD has traded between $143.14 and $248.86 during this last 52-week period.
The fund has a beta of 1.33 and standard deviation of 41.55% for the trailing three-year period, which makes XSD a high risk choice in this particular space. With about 41 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.
IShares Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index. IShares Semiconductor ETF has $6.53 billion in assets, VanEck Semiconductor ETF has $7.33 billion. SOXX has an expense ratio of 0.40% and SMH charges 0.35%.
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?
The SPDR S&P Semiconductor ETF (XSD - Free Report) made its debut on 01/31/2006, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors. XSD has been able to amass assets over $1.12 billion, making it one of the larger ETFs in the Technology ETFs. This particular fund, before fees and expenses, 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.
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 0.35%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 96.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
When you look at individual holdings, Impinj Inc. (PI - Free Report) accounts for about 4.52% of the fund's total assets, followed by First Solar Inc. (FSLR - Free Report) and Wolfspeed Inc (WOLF - Free Report) .
XSD's top 10 holdings account for about 33.84% of its total assets under management.
Performance and Risk
The ETF has lost about -25.97% and is down about -24.10% so far this year and in the past one year (as of 11/25/2022), respectively. XSD has traded between $143.14 and $248.86 during this last 52-week period.
The fund has a beta of 1.33 and standard deviation of 41.55% for the trailing three-year period, which makes XSD a high risk choice in this particular space. With about 41 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.
IShares Semiconductor ETF (SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index. IShares Semiconductor ETF has $6.53 billion in assets, VanEck Semiconductor ETF has $7.33 billion. SOXX has an expense ratio of 0.40% and SMH charges 0.35%.
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.