Launched on 12/16/1998, the Technology Select Sector SPDR ETF (XLK) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 6, placing it in top 38%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $63.93 billion, making it the largest ETF 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 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.76%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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, Apple Inc (AAPL) accounts for about 15.69% of total assets, followed by Microsoft Corp (MSFT) and Nvidia Corp (NVDA).
The top 10 holdings account for about 61.89% of total assets under management.
Performance and Risk
Year-to-date, the Technology Select Sector SPDR ETF has lost about -11.08% so far, and is down about -0.16% over the last 12 months (as of 03/31/2025). XLK has traded between $192.53 and $242.18 in this past 52-week period.
The ETF has a beta of 1.13 and standard deviation of 24.67% for the trailing three-year period, making it a medium risk choice in the space. With about 73 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 excellent 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.
IShares U.S. Technology ETF (IYW) tracks Dow Jones U.S. Technology Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. IShares U.S. Technology ETF has $17.50 billion in assets, Vanguard Information Technology ETF has $75.35 billion. IYW has an expense ratio of 0.39% and VGT charges 0.09%.
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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Technology Select Sector SPDR ETF (XLK): ETF Research Reports Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report iShares U.S. Technology ETF (IYW): ETF Research Reports Vanguard Information Technology ETF (VGT): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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