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Is SPDR S&P Semiconductor ETF (XSD) a Strong ETF Right Now?
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Launched on 01/31/2006, the SPDR S&P Semiconductor ETF (XSD - Free Report) is a smart beta exchange traded fund offering 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.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is managed by State Street Global Advisors, and has been able to amass over $1.40 billion, which makes it one of the larger ETFs in the Technology ETFs. 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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It's 12-month trailing dividend yield comes in at 0.44%.
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 100% of the portfolio.
Taking into account individual holdings, Rambus Inc. (RMBS - Free Report) accounts for about 4.13% of the fund's total assets, followed by Lattice Semiconductor Corporation (LSCC - Free Report) and Impinj Inc. (PI - Free Report) .
Its top 10 holdings account for approximately 33.59% of XSD's total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Semiconductor ETF has gained about 18.59% so far, and is down about -6.83% over the last 12 months (as of 03/29/2023). XSD has traded between $143.14 and $211.61 in this past 52-week period.
The fund has a beta of 1.40 and standard deviation of 38% for the trailing three-year period, which makes XSD a high risk choice in this particular space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Semiconductor ETF is a reasonable option for investors seeking to outperform the Technology ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $7.35 billion in assets, VanEck Semiconductor ETF has $7.69 billion. SOXX has an expense ratio of 0.35% 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?
Launched on 01/31/2006, the SPDR S&P Semiconductor ETF (XSD - Free Report) is a smart beta exchange traded fund offering 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.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is managed by State Street Global Advisors, and has been able to amass over $1.40 billion, which makes it one of the larger ETFs in the Technology ETFs. 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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.35%.
It's 12-month trailing dividend yield comes in at 0.44%.
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 100% of the portfolio.
Taking into account individual holdings, Rambus Inc. (RMBS - Free Report) accounts for about 4.13% of the fund's total assets, followed by Lattice Semiconductor Corporation (LSCC - Free Report) and Impinj Inc. (PI - Free Report) .
Its top 10 holdings account for approximately 33.59% of XSD's total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Semiconductor ETF has gained about 18.59% so far, and is down about -6.83% over the last 12 months (as of 03/29/2023). XSD has traded between $143.14 and $211.61 in this past 52-week period.
The fund has a beta of 1.40 and standard deviation of 38% for the trailing three-year period, which makes XSD a high risk choice in this particular space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Semiconductor ETF is a reasonable option for investors seeking to outperform the Technology ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $7.35 billion in assets, VanEck Semiconductor ETF has $7.69 billion. SOXX has an expense ratio of 0.35% 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.