The SPDR NYSE Technology ETF (XNTK) made its debut on 09/25/2000, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 managed by State Street Global Advisors. XNTK has been able to amass assets over $891.73 million, making it one of the larger ETFs in the Technology ETFs. XNTK seeks to match the performance of the NYSE Technology Index before fees and expenses.
The NYSE Technology Index is composed of 35 leading U.S.-listed technology-related companies.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for XNTK are 0.35%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.36%.
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.
Representing 67.40% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Telecom round out the top three.
Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 6.42% of total assets, followed by Micron Technology Inc (MU) and Broadcom Inc (AVGO).
Its top 10 holdings account for approximately 40.67% of XNTK's total assets under management.
Performance and Risk
The ETF return is roughly 23.16% so far this year and was up about 40.11% in the last one year (as of 07/17/2024). In the past 52-week period, it has traded between $129.70 and $204.18.
The ETF has a beta of 1.23 and standard deviation of 28.02% 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) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $72.63 billion in assets, Vanguard Information Technology ETF has $77.93 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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Get it free >>SPDR NYSE Technology ETF (XNTK): ETF Research Reports
Micron Technology, Inc. (MU) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
