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Should You Invest in the SPDR NYSE Technology ETF (XNTK)?

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If you're interested in broad exposure to the Technology - Broad segment of the equity market, look no further than the SPDR NYSE Technology ETF (XNTK - Free Report) , a passively managed exchange traded fund launched on 09/25/2000.

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 are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $420.44 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Broad segment of the equity market. XNTK seeks to match the performance of the NYSE Technology Index before fees and expenses.

The NYSE Technology Index is composed of 35 leading U.S.-listed technology-related companies.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 0.83%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 68.90% of the portfolio. Consumer Discretionary and Telecom round out the top three.

Looking at individual holdings, International Business Machines Corporation (IBM - Free Report) accounts for about 5.55% of total assets, followed by Booking Holdings Inc. (BKNG - Free Report) and Texas Instruments Incorporated (TXN - Free Report) .

The top 10 holdings account for about 39.59% of total assets under management.

Performance and Risk

The ETF return is roughly 18.08% so far this year and is down about -16.21% in the last one year (as of 03/21/2023). In that past 52-week period, it has traded between $90.06 and $144.85.

The ETF has a beta of 1.22 and standard deviation of 31.86% for the trailing three-year period. With about 36 holdings, it has more concentrated exposure than peers.

Alternatives

SPDR NYSE Technology 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, XNTK is an excellent 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.

Technology Select Sector SPDR ETF (XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $41.64 billion in assets, Vanguard Information Technology ETF has $44.54 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.

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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