The SPDR S&P Capital Markets ETF (KCE Quick QuoteKCE - Free Report) made its debut on 11/08/2005, and is a smart beta exchange traded fund that provides broad exposure to the Financials ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

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.

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.

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 sponsored by State Street Investment Management. It has amassed assets over $620.99 million, making it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, this particular fund 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

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.

Annual operating expenses for KCE are 0.35%, which makes it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 1.50%.

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.

KCE's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.

Taking into account individual holdings, Robinhood Markets Inc A (HOOD) accounts for about 2.28% of the fund's total assets, followed by Invesco Ltd (IVZ) and Carlyle Group Inc/the (CG).

Its top 10 holdings account for approximately 20.28% of KCE's total assets under management.

Performance and Risk

So far this year, KCE has gained about 10.25%, and is up roughly 22.67% in the last one year (as of 10/02/2025). During this past 52-week period, the fund has traded between $108.52 and $157.83.

KCE has a beta of 1.26 and standard deviation of 22.06% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 63 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) tracks Dow Jones U.S. Select Investment Services Index The fund has $1.55 billion in assets. IAI has an expense ratio of 0.38%.

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.