Should You Invest in the SPDR S&P Capital Markets ETF (KCE)?
Looking for broad exposure to the Financials - Brokers/ Capital markets segment of the equity market? You should consider the SPDR S&P Capital Markets ETF (KCE), a passively managed exchange traded fund launched on 11/08/2005.
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. Financials - Brokers/ Capital markets is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $218.90 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Brokers/ Capital markets segment of the equity market. KCE seeks to match the performance of the S&P Capital Markets Select Industry Index before fees and expenses.
The S&P Capital Markets Select Industry Index represents the capital markets segment of the S&P Total Market Index.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.03%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Coinbase Global Inc Class A (COIN) accounts for about 2.84% of total assets, followed by B. Riley Financial Inc (RILY) and Robinhood Markets Inc A (HOOD).
The top 10 holdings account for about 19.57% of total assets under management.
Performance and Risk
The ETF has added roughly 11.96% and it's up approximately 7.51% so far this year and in the past one year (as of 08/24/2023), respectively. KCE has traded between $71.56 and $92.85 during this last 52-week period.
The ETF has a beta of 1.18 and standard deviation of 23.43% for the trailing three-year period, making it a high risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Capital Markets ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. KCE, then, is not a suitable option for investors seeking exposure to the Financials ETFs segment of the market. However, there are better ETFs in the space to consider.
IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) tracks Dow Jones U.S. Select Investment Services Index. The fund has $394.95 million in assets. IAI has an expense ratio of 0.40%.
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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SPDR S&P Capital Markets ETF (KCE): ETF Research Reports
iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI): ETF Research Reports
B. Riley Financial, Inc. (RILY): Free Stock Analysis Report
Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
