The SPDR S&P Software & Services ETF (XSW) was launched on 09/28/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Software segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Software 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 $525.26 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Software segment of the equity market. XSW 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.
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 0.07%.
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.
This ETF has heaviest allocation in the Information Technology sector--about 96.70% of the portfolio.
Looking at individual holdings, D Wave Quantum Inc (QBTS) accounts for about 1.68% of total assets, followed by Soundhound Ai Inc A (SOUN) and Grid Dynamics Holdings Inc (GDYN).
The top 10 holdings account for about 9.21% of total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Software & Services ETF has added roughly 1.02% so far, and is up about 27.60% over the last 12 months (as of 01/28/2025). XSW has traded between $141.27 and $204.72 in this past 52-week period.
The ETF has a beta of 1.16 and standard deviation of 28.79% for the trailing three-year period, making it a high risk choice in the space. With about 148 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Software & Services ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XSW is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that 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 $416.76 million in assets, iShares Expanded Tech-Software Sector ETF has $9.78 billion. IGPT has an expense ratio of 0.58% and IGV charges 0.41%.
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 Software & Services ETF (XSW): ETF Research Reports
iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
Grid Dynamics Holdings, Inc. (GDYN) : Free Stock Analysis Report
SoundHound AI, Inc. (SOUN) : Free Stock Analysis Report
D-Wave Quantum Inc. (QBTS) : Free Stock Analysis Report
Invesco AI and Next Gen Software ETF (IGPT): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
