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Should You Invest in the SPDR S&P Semiconductor ETF (XSD)?

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Launched on 01/31/2006, the SPDR S&P Semiconductor ETF (XSD) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Semiconductors segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.06 billion, making it one of the average sized 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 0.14%.

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, Advanced Micro Devices Inc. (AMD) accounts for about 2.87% of total assets, followed by Nvidia Corporation (NVDA) and First Solar Inc. (FSLR).

The top 10 holdings account for about 27.62% of total assets under management.

Performance and Risk

Year-to-date, the SPDR S&P Semiconductor ETF return is roughly 16.89% so far, and it's up approximately 56.36% over the last 12 months (as of 08/27/2021). XSD has traded between $117.63 and $200.80 in this past 52-week period.

The ETF has a beta of 1.24 and standard deviation of 36.46% for the trailing three-year period, making it a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.

Alternatives

SPDR S&P Semiconductor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XSD is a great 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.

VanEck Vectors Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index and the iShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index. VanEck Vectors Semiconductor ETF has $6.15 billion in assets, iShares Semiconductor ETF has $7.23 billion. SMH has an expense ratio of 0.35% and SOXX charges 0.43%.

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
 
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
 
First Solar, Inc. (FSLR) : Free Stock Analysis Report
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
iShares Semiconductor ETF (SOXX): ETF Research Reports
 
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