Is State Street SPDR S&P Telecom ETF (XTL) a Strong ETF Right Now?

The State Street SPDR S&P Telecom ETF (XTL) was launched on 01/26/2011, and is a smart beta exchange traded fund designed to offer broad exposure to the Communication Services ETFs category of the market.What Are Smart Beta ETFs?The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.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.Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.Fund Sponsor & IndexThe fund is managed by State Street Investment Management, and has been able to amass over $306.19 million, which makes it one of the average sized ETFs in the Communication Services ETFs. Before fees and expenses, XTL seeks to match the performance of the S&P Telecom Select Industry Index.The S&P Telecom Select Industry Index is one of nineteen S&P Select Industry Indices, each designed to measure the performance of a narrow sub-industry or group of sub-industries as defined by the GICS.Companies in the Select Industry Indices are classified based primarily on revenues; however, earnings and market perception are also considered. The Telecom Index is a modified equal weight index.Cost & Other ExpensesCost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.Operating expenses on an annual basis are 0.35% for XTL, making it on par with most peer products in the space.It's 12-month trailing dividend yield comes in at 0.86%.Sector Exposure and Top HoldingsEven though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.XTL's heaviest allocation is in the Information Technology sector, which is about 61.5% of the portfolio. Its Telecom and Energy round out the top three.Looking at individual holdings, Applied Optoelectronics Inc (AAOI) accounts for about 9.39% of total assets, followed by Lumentum Holdings Inc (LITE) and Viavi Solutions Inc (VIAV).The top 10 holdings account for about 45.63% of total assets under management.Performance and RiskThe ETF has added roughly 22.78% so far this year and it's up approximately 84.62% in the last one year (as of 03/19/2026). In the past 52-week period, it has traded between $86.93 and $192.62The fund has a beta of 1.10 and standard deviation of 24.37% for the trailing three-year period, which makes XTL a medium risk choice in this particular space. With about 40 holdings, it has more concentrated exposure than peers .AlternativesState Street SPDR S&P Telecom ETF is a reasonable option for investors seeking to outperform the Communication Services ETFs segment of the market. However, there are other ETFs in the space which investors could consider.Vanguard Communication Services Index Fund ETF Shares (VOX) tracks MSCI US Investable Market Telecommunication Services 25/50 Index and the State Street Communication Services Select Sector SPDR ETF (XLC) tracks COMMUNICATION SERVICES SELECT SECTOR IND. Vanguard Communication Services Index Fund ETF Shares has $5.79 billion in assets, State Street Communication Services Select Sector SPDR ETF has $24.74 billion. VOX has an expense ratio of 0.09% and XLC changes 0.08%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Communication Services 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 >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report State Street SPDR S&P Telecom ETF (XTL): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks