Is State Street SPDR S&P Software & Services ETF (XSW) a Strong ETF Right Now?

Designed to provide broad exposure to the Technology ETFs category of the market, the State Street SPDR S&P Software & Services ETF (XSW) is a smart beta exchange traded fund launched on 09/28/2011.What Are Smart Beta ETFs?The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.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.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.Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.Fund Sponsor & IndexManaged by State Street Investment Management, XSW has amassed assets over $416.4 million, making it one of the average sized ETFs in the Technology ETFs. This particular fund seeks to match the performance of the S&P Software & Services Select Industry Index before fees and expenses.The S&P Software & Services Select Industry Index represents the software sub-industry portion of the S&P Total Stock Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Global Select Market. The Software Index is a modified equal weight index.Cost & Other ExpensesFor ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.Operating expenses on an annual basis are 0.35% for this ETF, which makes it one of the least expensive products in the space.It's 12-month trailing dividend yield comes in at 0.00%.Sector Exposure and Top HoldingsIt 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.Representing 97.2% of the portfolio, the fund has heaviest allocation to the Information Technology sector.Taking into account individual holdings, Arteris Inc (AIP) accounts for about 0.96% of the fund's total assets, followed by Hut 8 Corp (HUT) and A10 Networks Inc (ATEN).The top 10 holdings account for about 9.05% of total assets under management.Performance and RiskSo far this year, XSW has lost about -5.55%, and is down about -6.69% in the last one year (as of 07/02/2026). During this past 52-week period, the fund has traded between $135.97 and $205.24.The ETF has a beta of 1.16 and standard deviation of 26.46% for the trailing three-year period, making it a high risk choice in the space. With about 138 holdings, it effectively diversifies company-specific risk .AlternativesState Street SPDR S&P Software & Services 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.Invesco AI and Next Gen Software ETF (IGPT) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID and the iShares Expanded Tech-Software Sector ETF (IGV) tracks S&P North American Technology-Software Index. Invesco AI and Next Gen Software ETF has $1.3 billion in assets, iShares Expanded Tech-Software Sector ETF has $14.18 billion. IGPT has an expense ratio of 0.56% and IGV changes 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 Technology ETFsBottom LineTo 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.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks