Should You Invest in the SPDR S&P Semiconductor ETF (XSD)? #CanadaFinance

If you’re interested in broad exposure to the Technology – Semiconductors segment of the equity market, look no further than the SPDR S&P Semiconductor ETF (XSD), a passively managed exchange traded fund launched on 01/31/2006.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology – Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.21 billion, making it one of the larger ETFs attempting to match the performance of the Technology – Semiconductors segment of the equity market. 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.

When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 0.22%.

It 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.

This ETF has heaviest allocation in the Information Technology sector–about 100% of the portfolio.

Looking at individual holdings, Broadcom Inc (AVGO) accounts for about 3.97% of total assets, followed by Credo Technology Group Holdi (CRDO) and Qorvo Inc (QRVO).

The top 10 holdings account for about 34.53% of total assets under management.

So far this year, XSD has lost about -8.76%, and is up about 1.58% in the last one year (as of 03/03/2025). During this past 52-week period, the fund has traded between $201.42 and $273.98.