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Is SPDR S&P Capital Markets ETF (KCE) a Strong ETF Right Now?
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Launched on 11/08/2005, the SPDR S&P Capital Markets ETF (KCE - Free Report) is a smart beta exchange traded fund offering broad exposure to the Financials 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by State Street Global Advisors. It has amassed assets over $266.10 million, making it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, KCE seeks to match the performance of the S&P Capital Markets Select Industry Index.
The S&P Capital Markets Select Industry Index represents the capital markets segment of the S&P Total Market Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for KCE are 0.35%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.87%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Financials sector.
Looking at individual holdings, Blue Owl Capital Inc (OWL - Free Report) accounts for about 1.97% of total assets, followed by Cme Group Inc (CME - Free Report) and Cboe Global Markets Inc (CBOE - Free Report) .
KCE's top 10 holdings account for about 18.8% of its total assets under management.
Performance and Risk
The ETF has lost about -2.55% so far this year and was up about 25.26% in the last one year (as of 01/05/2024). In the past 52-week period, it has traded between $76.39 and $102.81.
KCE has a beta of 1.21 and standard deviation of 23.06% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Capital Markets ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) tracks Dow Jones U.S. Select Investment Services Index. The fund has $418.80 million in assets. IAI has an expense ratio of 0.40%.
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.
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 Capital Markets ETF (KCE) a Strong ETF Right Now?
Launched on 11/08/2005, the SPDR S&P Capital Markets ETF (KCE - Free Report) is a smart beta exchange traded fund offering broad exposure to the Financials 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by State Street Global Advisors. It has amassed assets over $266.10 million, making it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, KCE seeks to match the performance of the S&P Capital Markets Select Industry Index.
The S&P Capital Markets Select Industry Index represents the capital markets segment of the S&P Total Market Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for KCE are 0.35%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.87%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Financials sector.
Looking at individual holdings, Blue Owl Capital Inc (OWL - Free Report) accounts for about 1.97% of total assets, followed by Cme Group Inc (CME - Free Report) and Cboe Global Markets Inc (CBOE - Free Report) .
KCE's top 10 holdings account for about 18.8% of its total assets under management.
Performance and Risk
The ETF has lost about -2.55% so far this year and was up about 25.26% in the last one year (as of 01/05/2024). In the past 52-week period, it has traded between $76.39 and $102.81.
KCE has a beta of 1.21 and standard deviation of 23.06% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Capital Markets ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) tracks Dow Jones U.S. Select Investment Services Index. The fund has $418.80 million in assets. IAI has an expense ratio of 0.40%.
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.
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.