Making its debut on 01/31/2006, smart beta exchange traded fund State Street SPDR S&P Semiconductor ETF (XSD) provides investors broad exposure to the Technology ETFs category of the market.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by State Street Investment Management. It has amassed assets over $1.79 billion, making it one of the larger ETFs in the Technology ETFs. 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.35% for XSD, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.23%.
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.
For XSD, it has heaviest allocation in the Information Technology sector --about 100% of the portfolio.
When you look at individual holdings, Impinj Inc (PI) accounts for about 3.71% of the fund's total assets, followed by Micron Technology Inc (MU) and On Semiconductor (ON).
Its top 10 holdings account for approximately 30.7% of XSD's total assets under management.
Performance and Risk
The ETF return is roughly 12.98% so far this year and it's up approximately 35.17% in the last one year (as of 01/23/2026). In the past 52-week period, it has traded between $160.63 and $363.34
XSD has a beta of 1.63 and standard deviation of 36.30% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 44 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 $20.7 billion in assets, VanEck Semiconductor ETF has $42.86 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
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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State Street SPDR S&P Semiconductor ETF (XSD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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