A smart beta exchange traded fund, the SPDR S&P Insurance ETF (KIE) debuted on 11/08/2005, and offers broad exposure to the Financials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
The fund is managed by State Street Global Advisors, and has been able to amass over $938.93 million, which makes it one of the average sized ETFs in the Financials ETFs. KIE seeks to match the performance of the S&P Insurance Select Industry Index before fees and expenses.
The S&P Insurance Select Industry Index represents the insurance segment of the S&P Total Market Index.
Cost & Other Expenses
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 cousins, other things remaining the same.
Annual operating expenses for KIE are 0.35%, which makes it one of the least expensive products in the space.
KIE's 12-month trailing dividend yield is 1.63%.
Sector Exposure and Top Holdings
ETFs offer 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 Financials sector - about 100% of the portfolio.
Taking into account individual holdings, Palomar Holdings Inc (PLMR) accounts for about 2.24% of the fund's total assets, followed by Oscar Health Inc Class A (OSCR) and Wr Berkley Corp (WRB).
The top 10 holdings account for about 20.71% of total assets under management.
Performance and Risk
So far this year, KIE has added roughly 2.65%, and was up about 16.23% in the last one year (as of 05/26/2025). During this past 52-week period, the fund has traded between $48.97 and $62.03.
The ETF has a beta of 0.76 and standard deviation of 18.35% for the trailing three-year period, making it a medium risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Insurance ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Invesco KBW Property & Casualty Insurance ETF (KBWP) tracks KBW Nasdaq Property & Casualty Index and the iShares U.S. Insurance ETF (IAK) tracks Dow Jones U.S. Select Insurance Index. Invesco KBW Property & Casualty Insurance ETF has $483 million in assets, iShares U.S. Insurance ETF has $819.18 million. KBWP has an expense ratio of 0.35% and IAK charges 0.39%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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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SPDR S&P Insurance ETF (KIE): ETF Research Reports W.R. Berkley Corporation (WRB): Free Stock Analysis Report iShares U.S. Insurance ETF (IAK): ETF Research Reports Invesco KBW Property & Casualty Insurance ETF (KBWP): ETF Research Reports Palomar Holdings, Inc. (PLMR): Free Stock Analysis Report Oscar Health, Inc. (OSCR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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