Making its debut on 09/25/2000, smart beta exchange traded fund SPDR NYSE Technology ETF (XNTK) provides investors 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
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
Because the fund has amassed over $795.91 million, this makes it one of the larger ETFs in the Technology ETFs. XNTK is managed by State Street Global Advisors. 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 XNTK, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.33%.
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.
For XNTK, it has heaviest allocation in the Information Technology sector --about 66.90% of the portfolio --while Consumer Discretionary and Telecom round out the top three.
When you look at individual holdings, Nvidia Corp (NVDA) accounts for about 5.47% of the fund's total assets, followed by Taiwan Semiconductor Sp Adr (TSM) and Broadcom Inc (AVGO).
Its top 10 holdings account for approximately 36.31% of XNTK's total assets under management.
Performance and Risk
The ETF has gained about 14.65% and is up about 32.91% so far this year and in the past one year (as of 09/18/2024), respectively. XNTK has traded between $129.70 and $204.18 during this last 52-week period.
XNTK has a beta of 1.23 and standard deviation of 28.94% 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 $67.99 billion in assets, Vanguard Information Technology ETF has $74.20 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.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>SPDR NYSE Technology ETF (XNTK): ETF Research Reports
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
