Is State Street SPDR S&P Semiconductor ETF (XSD) a Strong ETF Right Now?

Designed to provide broad exposure to the Technology ETFs category of the market, the State Street SPDR S&P Semiconductor ETF (XSD) is a smart beta exchange traded fund launched on 01/31/2006.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $1.46 billion, this makes it one of the larger ETFs in the Technology ETFs. XSD is managed by State Street Investment Management. 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.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 0.25%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 100% of the portfolio, the fund has heaviest allocation to the Information Technology sector.

Looking at individual holdings, Rigetti Computing Inc (RGTI) accounts for about 7.24% of total assets, followed by Intel Corp (INTC) and Advanced Micro Devices (AMD).

Its top 10 holdings account for approximately 36.31% of XSD's total assets under management.

Performance and Risk

The ETF has gained about 16.11% and was up about 24.97% so far this year and in the past one year (as of 11/21/2025), respectively. XSD has traded between $160.63 and $353.65 during this last 52-week period.

XSD has a beta of 1.64 and standard deviation of 36.55% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 42 holdings, it has more concentrated exposure than peers .

Alternatives

State Street SPDR S&P Semiconductor ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

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 $14.83 billion in assets, VanEck Semiconductor ETF has $33.66 billion. SOXX has an expense ratio of 0.34% and SMH changes 0.35%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs

Bottom Line

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This article originally published on Zacks Investment Research (zacks.com).

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