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Is SPDR S&P Capital Markets ETF (KCE) a Strong ETF Right Now?
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The SPDR S&P Capital Markets ETF (KCE - Free Report) was launched on 11/08/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Financials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
Managed by State Street Global Advisors, KCE has amassed assets over $397.14 million, making it one of the average sized ETFs in the Financials ETFs. KCE, before fees and expenses, seeks to match the performance of the S&P Capital Markets Select Industry Index.
The S&P Capital Markets Select Industry Index represents the capital markets segment of the S&P Total Market 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.
Annual operating expenses for KCE 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 1.74%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For KCE, it has heaviest allocation in the Financials sector --about 100% of the portfolio.
When you look at individual holdings, Coinbase Global Inc Class A (COIN - Free Report) accounts for about 2.91% of the fund's total assets, followed by Tpg Inc (TPG - Free Report) and Kkr + Co Inc (KKR - Free Report) .
The top 10 holdings account for about 20.59% of total assets under management.
Performance and Risk
The ETF has added about 4.92% and was up about 22.28% so far this year and in the past one year (as of 03/06/2024), respectively. KCE has traded between $76.39 and $107.43 during this last 52-week period.
The ETF has a beta of 1.21 and standard deviation of 22.72% for the trailing three-year period, making it a high risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Capital Markets ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) tracks Dow Jones U.S. Select Investment Services Index. The fund has $434.54 million in assets. IAI has an expense ratio of 0.40%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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 SPDR S&P Capital Markets ETF (KCE) a Strong ETF Right Now?
The SPDR S&P Capital Markets ETF (KCE - Free Report) was launched on 11/08/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Financials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
Managed by State Street Global Advisors, KCE has amassed assets over $397.14 million, making it one of the average sized ETFs in the Financials ETFs. KCE, before fees and expenses, seeks to match the performance of the S&P Capital Markets Select Industry Index.
The S&P Capital Markets Select Industry Index represents the capital markets segment of the S&P Total Market 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.
Annual operating expenses for KCE 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 1.74%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For KCE, it has heaviest allocation in the Financials sector --about 100% of the portfolio.
When you look at individual holdings, Coinbase Global Inc Class A (COIN - Free Report) accounts for about 2.91% of the fund's total assets, followed by Tpg Inc (TPG - Free Report) and Kkr + Co Inc (KKR - Free Report) .
The top 10 holdings account for about 20.59% of total assets under management.
Performance and Risk
The ETF has added about 4.92% and was up about 22.28% so far this year and in the past one year (as of 03/06/2024), respectively. KCE has traded between $76.39 and $107.43 during this last 52-week period.
The ETF has a beta of 1.21 and standard deviation of 22.72% for the trailing three-year period, making it a high risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Capital Markets ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) tracks Dow Jones U.S. Select Investment Services Index. The fund has $434.54 million in assets. IAI has an expense ratio of 0.40%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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.