Making its debut on 01/31/2006, smart beta exchange traded fund SPDR S&P Semiconductor ETF (
XSD Quick Quote XSD - Free Report) provides investors broad exposure to the Technology 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street Global Advisors, and has been able to amass over $1.48 billion, which makes it one of the larger ETFs in the Technology ETFs. Before fees and expenses, this particular fund 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.42%.
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.
For XSD, it has heaviest allocation in the Information Technology sector --about 100% of the portfolio.
Looking at individual holdings, Rambus Inc. (
RMBS Quick Quote RMBS - Free Report) accounts for about 3.35% of total assets, followed by Nvidia Corporation ( NVDA Quick Quote NVDA - Free Report) and Intel Corporation ( INTC Quick Quote INTC - Free Report) .
XSD's top 10 holdings account for about 31.27% of its total assets under management.
Performance and Risk
So far this year, XSD has added about 25.07%, and is up about 16.15% in the last one year (as of 06/02/2023). During this past 52-week period, the fund has traded between $143.14 and $210.40.
XSD has a beta of 1.39 and standard deviation of 36.88% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
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 Quick Quote SOXX - Free Report) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF ( SMH Quick Quote SMH - Free Report) tracks MVIS US Listed Semiconductor 25 Index. IShares Semiconductor ETF has $8.58 billion in assets, VanEck Semiconductor ETF has $9.03 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.
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.