If you're interested in broad exposure to the Financials - Brokers/ Capital markets segment of the equity market, look no further than the SPDR S&P Capital Markets ETF (KCE), a passively managed exchange traded fund launched on 11/08/2005.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Brokers/ Capital markets is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $395.27 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Brokers/ Capital markets segment of the equity market. KCE seeks to match the performance of the S&P Capital Markets Select Industry Index before fees and expenses.
The S&P Capital Markets Select Industry Index represents the capital markets segment of the S&P Total Market Index.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.78%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Coinbase Global Inc Class A (COIN) accounts for about 2.91% of total assets, followed by Tpg Inc (TPG) and Kkr + Co Inc (KKR).
The top 10 holdings account for about 20.59% of total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Capital Markets ETF return is roughly 2.55% so far, and is up about 20.39% over the last 12 months (as of 02/26/2024). KCE has traded between $76.39 and $104.57 in this past 52-week period.
The ETF has a beta of 1.21 and standard deviation of 22.87% for the trailing three-year period, making it a high risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Capital Markets ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. KCE, then, is not the best option for investors seeking exposure to the Financials ETFs segment of the market. However, there are better ETFs in the space to consider.
IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) tracks Dow Jones U.S. Select Investment Services Index. The fund has $432.06 million in assets. IAI has an expense ratio of 0.40%.
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.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>SPDR S&P Capital Markets ETF (KCE): ETF Research Reports
KKR & Co. Inc. (KKR) : Free Stock Analysis Report
iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI): ETF Research Reports
Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
TPG Inc. (TPG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
