Should You Invest in the SPDR S&P Semiconductor ETF (XSD)?
Looking for broad exposure to the Technology - Semiconductors segment of the equity market? You should consider the SPDR S&P Semiconductor ETF (XSD), a passively managed exchange traded fund launched on 01/31/2006.
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 are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.34 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Semiconductors segment of the equity market. XSD seeks to match the performance of the S&P Semiconductor Select Industry Index before fees and expenses.
The S&P Semiconductor Select Industry Index represents the Semiconductor sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Semiconductor Index is a modified equal weight index.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.37%.
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 Information Technology sector--about 100% of the portfolio.
Looking at individual holdings, Rambus Inc. (RMBS) accounts for about 4.13% of total assets, followed by Lattice Semiconductor Corporation (LSCC) and Impinj Inc. (PI).
The top 10 holdings account for about 33.59% of total assets under management.
Performance and Risk
So far this year, XSD has added about 18.51%, and is down about -2.24% in the last one year (as of 03/20/2023). During this past 52-week period, the fund has traded between $143.14 and $219.75.
The ETF has a beta of 1.40 and standard deviation of 39.57% for the trailing three-year period, making it a high risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Semiconductor ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XSD is a reasonable option for those seeking exposure to the Technology ETFs area of the market. Investors might also want to consider some other ETF options in the space.
IShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index. IShares Semiconductor ETF has $7.34 billion in assets, VanEck Semiconductor ETF has $7.68 billion. SOXX has an expense ratio of 0.35% and SMH charges 0.35%.
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 Semiconductor ETF (XSD): ETF Research Reports
Rambus, Inc. (RMBS) : Free Stock Analysis Report
Lattice Semiconductor Corporation (LSCC) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
Impinj, Inc. (PI) : Free Stock Analysis Report
iShares Semiconductor ETF (SOXX): ETF Research Reports
