Launched on 09/28/2011, the SPDR S&P Software & Services ETF (XSW) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Software segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Software is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $317.07 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Software segment of the equity market. XSW seeks to match the performance of the S&P Software & Services Select Industry Index before fees and expenses.
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.
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 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 0.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 95.90% of the portfolio.
Looking at individual holdings, Applovin Corp Class A (APP) accounts for about 1.17% of total assets, followed by Cleanspark Inc (CLSK) and Marathon Digital Holdings In (MARA).
The top 10 holdings account for about 9.39% of total assets under management.
Performance and Risk
The ETF has gained about 23.01% and it's up approximately 10.45% so far this year and in the past one year (as of 09/12/2023), respectively. XSW has traded between $102 and $142.60 during this last 52-week period.
The ETF has a beta of 1.12 and standard deviation of 29.22% for the trailing three-year period, making it a high risk choice in the space. With about 152 holdings, it effectively diversifies company-specific risk.
SPDR S&P Software & Services ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XSW is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that 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 $173.91 million in assets, iShares Expanded Tech-Software Sector ETF has $6.82 billion. IGPT has an expense ratio of 0.60% and IGV charges 0.41%.
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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SPDR S&P Software & Services ETF (XSW): ETF Research Reports
AppLovin Corporation (APP): Free Stock Analysis Report
Marathon Digital Holdings, Inc. (MARA): Free Stock Analysis Report
iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
Cleanspark, Inc. (CLSK): Free Stock Analysis Report
Invesco AI and Next Gen Software ETF (IGPT): ETF Research Reports