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Is SPDR NYSE Technology ETF (XNTK) a Strong ETF Right Now?

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Designed to provide broad exposure to the Technology ETFs category of the market, the SPDR NYSE Technology ETF (XNTK - Free Report) is a smart beta exchange traded fund launched on 09/25/2000.

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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

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

XNTK is managed by State Street Global Advisors, and this fund has amassed over $868.77 million, which makes it one of the larger ETFs in the Technology ETFs. This particular fund, before fees and expenses, seeks to match the performance of the NYSE Technology Index.

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

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.

XNTK's 12-month trailing dividend yield is 0.40%.

Sector Exposure and Top Holdings

ETFs offer 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 Information Technology sector - about 64.70% of the portfolio. Consumer Discretionary and Telecom round out the top three.

Looking at individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 6.49% of total assets, followed by Taiwan Semiconductor Sp Adr (TSM - Free Report) and Broadcom Inc (AVGO - Free Report) .

Its top 10 holdings account for approximately 38.4% of XNTK's total assets under management.

Performance and Risk

The ETF has added about 25.52% so far this year and was up about 35.42% in the last one year (as of 11/22/2024). In the past 52-week period, it has traded between $152.15 and $207.80.

XNTK has a beta of 1.23 and standard deviation of 28.92% for the trailing three-year period. With about 37 holdings, it has more concentrated exposure than peers.

Alternatives

SPDR NYSE Technology ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which 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 $73.05 billion in assets, Vanguard Information Technology ETF has $82.21 billion. XLK has an expense ratio of 0.09% and VGT charges 0.10%.

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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