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Is State Street SPDR S&P Software & Services ETF (XSW) a Strong ETF Right Now?
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Launched on 09/28/2011, the State Street SPDR S&P Software & Services ETF (XSW - Free Report) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.
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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by State Street Investment Management, and has been able to amass over $360.36 million, which makes it one of the average sized ETFs in the Technology ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P Software & Services Select Industry Index.
The S&P Software & Services Select Industry Index represents the software sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Software Index is a modified equal weight index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for XSW, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.04%.
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.
XSW's heaviest allocation is in the Information Technology sector, which is about 95.9% of the portfolio.
Taking into account individual holdings, Adeia Inc (ADEA) accounts for about 1.5% of the fund's total assets, followed by Ringcentral Inc Class A (RNG) and Onestream Inc (OS).
The top 10 holdings account for about 11.1% of total assets under management.
Performance and Risk
The ETF has lost about -19.11% so far this year and is down about -5.94% in the last one year (as of 04/27/2026). In the past 52-week period, it has traded between $135.97 and $205.24
XSW has a beta of 1.16 and standard deviation of 25.72% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 142 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P Software & Services 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.
Invesco AI and Next Gen Software ETF (IGPT) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID and the iShares Expanded Tech-Software Sector ETF (IGV) tracks S&P North American Technology-Software Index. Invesco AI and Next Gen Software ETF has $843.62 million in assets, iShares Expanded Tech-Software Sector ETF has $12.46 billion. IGPT has an expense ratio of 0.56% and IGV changes 0.39%.
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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Is State Street SPDR S&P Software & Services ETF (XSW) a Strong ETF Right Now?
Launched on 09/28/2011, the State Street SPDR S&P Software & Services ETF (XSW - Free Report) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.
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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by State Street Investment Management, and has been able to amass over $360.36 million, which makes it one of the average sized ETFs in the Technology ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P Software & Services Select Industry Index.
The S&P Software & Services Select Industry Index represents the software sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Software Index is a modified equal weight index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for XSW, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.04%.
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.
XSW's heaviest allocation is in the Information Technology sector, which is about 95.9% of the portfolio.
Taking into account individual holdings, Adeia Inc (ADEA) accounts for about 1.5% of the fund's total assets, followed by Ringcentral Inc Class A (RNG) and Onestream Inc (OS).
The top 10 holdings account for about 11.1% of total assets under management.
Performance and Risk
The ETF has lost about -19.11% so far this year and is down about -5.94% in the last one year (as of 04/27/2026). In the past 52-week period, it has traded between $135.97 and $205.24
XSW has a beta of 1.16 and standard deviation of 25.72% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 142 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P Software & Services 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.
Invesco AI and Next Gen Software ETF (IGPT) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID and the iShares Expanded Tech-Software Sector ETF (IGV) tracks S&P North American Technology-Software Index. Invesco AI and Next Gen Software ETF has $843.62 million in assets, iShares Expanded Tech-Software Sector ETF has $12.46 billion. IGPT has an expense ratio of 0.56% and IGV changes 0.39%.
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.