If you're interested in broad exposure to the Financials - Brokers/ Capital markets segment of the equity market, look no further than the SPDR S&P Capital Markets ETF (KCE Quick QuoteKCE - Free Report) , a passively managed exchange traded fund launched on 11/08/2005.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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. Financials - Brokers/ Capital markets is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $375.60 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Brokers/ Capital markets segment of the equity market. KCE seeks to match the performance of the S&P Capital Markets Select Industry Index before fees and expenses.

The S&P Capital Markets Select Industry Index represents the capital markets segment of the S&P Total Market Index.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 1.70%.

Sector Exposure and Top Holdings

ETFs offer a 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.

This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.

Looking at individual holdings, Stepstone Group Inc Class A (STEP Quick QuoteSTEP - Free Report) accounts for about 1.88% of total assets, followed by Lpl Financial Holdings Inc (LPLA Quick QuoteLPLA - Free Report) and Blue Owl Capital Inc (OWL Quick QuoteOWL - Free Report) .

The top 10 holdings account for about 18.30% of total assets under management.

Performance and Risk

Year-to-date, the SPDR S&P Capital Markets ETF has added roughly 30.77% so far, and is up about 61.84% over the last 12 months (as of 11/04/2024). KCE has traded between $85.33 and $135.54 in this past 52-week period.

The ETF has a beta of 1.18 and standard deviation of 22.60% for the trailing three-year period, making it a high risk choice in the space. With about 63 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P Capital Markets ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. KCE, then, is not a suitable option for investors seeking exposure to the Financials ETFs segment of the market. However, there are better ETFs in the space to consider.

IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI Quick QuoteIAI - Free Report) tracks Dow Jones U.S. Select Investment Services Index. The fund has $1.50 billion in assets. IAI has an expense ratio of 0.40%.

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.