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Should You Invest in the Technology Select Sector SPDR ETF (XLK)?
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Looking for broad exposure to the Technology - Broad segment of the equity market? You should consider the Technology Select Sector SPDR ETF (XLK - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $51.19 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Broad segment of the equity market. XLK seeks to match the performance of the Technology Select Sector Index before fees and expenses.
The Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.12%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.65%.
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 100% of the portfolio.
Looking at individual holdings, Microsoft Corporation (MSFT - Free Report) accounts for about 22.65% of total assets, followed by Apple Inc. (AAPL - Free Report) and Nvidia Corporation (NVDA - Free Report) .
The top 10 holdings account for about 66.03% of total assets under management.
Performance and Risk
So far this year, XLK return is roughly 35.34%, and was up about 33.99% in the last one year (as of 12/23/2021). During this past 52-week period, the fund has traded between $125.83 and $174.88.
The ETF has a beta of 1.04 and standard deviation of 27.99% for the trailing three-year period, making it a medium risk choice in the space. With about 78 holdings, it effectively diversifies company-specific risk.
Alternatives
Technology Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLK 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.
ARK Innovation ETF (ARKK - Free Report) tracks N/A and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. ARK Innovation ETF has $16.94 billion in assets, Vanguard Information Technology ETF has $55.81 billion. ARKK has an expense ratio of 0.75% and VGT charges 0.10%.
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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Should You Invest in the Technology Select Sector SPDR ETF (XLK)?
Looking for broad exposure to the Technology - Broad segment of the equity market? You should consider the Technology Select Sector SPDR ETF (XLK - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $51.19 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Broad segment of the equity market. XLK seeks to match the performance of the Technology Select Sector Index before fees and expenses.
The Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.12%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.65%.
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 100% of the portfolio.
Looking at individual holdings, Microsoft Corporation (MSFT - Free Report) accounts for about 22.65% of total assets, followed by Apple Inc. (AAPL - Free Report) and Nvidia Corporation (NVDA - Free Report) .
The top 10 holdings account for about 66.03% of total assets under management.
Performance and Risk
So far this year, XLK return is roughly 35.34%, and was up about 33.99% in the last one year (as of 12/23/2021). During this past 52-week period, the fund has traded between $125.83 and $174.88.
The ETF has a beta of 1.04 and standard deviation of 27.99% for the trailing three-year period, making it a medium risk choice in the space. With about 78 holdings, it effectively diversifies company-specific risk.
Alternatives
Technology Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLK 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.
ARK Innovation ETF (ARKK - Free Report) tracks N/A and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. ARK Innovation ETF has $16.94 billion in assets, Vanguard Information Technology ETF has $55.81 billion. ARKK has an expense ratio of 0.75% and VGT charges 0.10%.
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.