The State Street SPDR S&P Semiconductor ETF (XSD) made its debut on 01/31/2006, and is a smart beta exchange traded fund that provides broad exposure to the Technology 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $2.65 billion, this makes it one of the larger ETFs in the Technology ETFs. XSD is managed by State Street Investment Management. 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.
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.
Operating expenses on an annual basis are 0.35% for XSD, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.16%.
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.
For XSD, it has heaviest allocation in the Information Technology sector --about 100% of the portfolio.
When you look at individual holdings, Maxlinear Inc (MXL) accounts for about 5.79% of the fund's total assets, followed by Marvell Technology Inc (MRVL) and Astera Labs Inc (ALAB).
XSD's top 10 holdings account for about 38.15% of its total assets under management.
Performance and Risk
The ETF has added roughly 46.74% and is up about 74.75% so far this year and in the past one year (as of 07/29/2026), respectively. XSD has traded between $261.69 and $649.73 during this last 52-week period.
XSD has a beta of 1.99 and standard deviation of 40.07% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 46 holdings, it has more concentrated exposure than peers .
Alternatives
State Street SPDR S&P Semiconductor 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.
iShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index. iShares Semiconductor ETF has $40.26 billion in assets, VanEck Semiconductor ETF has $63.42 billion. SOXX has an expense ratio of 0.34% and SMH changes 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs
Bottom Line
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State Street SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).