Launched on September 28, 2011, the State Street SPDR S&P Software & Services ETF (XSW) is a smart beta exchange-traded fund that provides broad exposure to the Technology ETFs market category.
The ETF industry has long been dominated by products based on market capitalization-weighted indexes, a strategy designed to reflect the market or a particular market segment.
Because market cap-weighted indexes provide a cheap, easy, and transparent way to replicate market returns, they work well for investors who believe in market efficiency.
However, there are investors who think it is possible to beat the market with good stock selection; this group likely invests in a different class of funds, known as smart beta, which follow non-cap-weighted strategies.
These indices attempt to select stocks that offer better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies such as equal weighting, one of the simplest options out there, fundamental weighting and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
XSW is managed by State Street Investment Management and this fund has amassed over $444.12 million, making it one of the mid-sized ETFs among technology ETFs. This specific fund, before fees and expenses, seeks to match the performance of the S&P Software & Services Select Industry Index.
The S&P Software & Services Select Industry Index represents the software subsector portion of the S&P Total Stock Market Index. The S&P TMI tracks all 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.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamental factors are the same.
With one of the least expensive products on the market, this ETF has annual operating expenses of 0.35%.
It has a 12-month rolling dividend yield of 0.06%.
Most ETFs are highly transparent products and disclose their positions daily. ETFs also provide diversified exposure, minimizing risk on individual stocks, although it is still important for investors to research a fund’s investments.
The fund represents 97% of the portfolio and has the largest allocation to the information technology sector.
Looking at individual investments, Cipher Mining Inc (CIFR) accounts for about 1.41% of the fund’s total assets, followed by D Wave Quantum Inc (QBTS) and Uipath Inc Class A (PATH).
The top 10 holdings account for approximately 11.45% of XSW’s total assets under management.
The ETF has added about 1.22% so far this year and is down about -1.03% over the past year (as of 12/24/2025). Over the past 52 weeks, it has traded between $141.65 and $205.24
The fund has a beta of 1.15 and a standard deviation of 24.81% for the trailing three-year period, making XSW a high-risk pick in this particular area. With approximately 138 investments, the company effectively diversifies company-specific risk.
State Street SPDR S&P Software & Services ETF is an excellent option for investors looking to outperform the technology ETFs segment of the market. There are other ETFs in the space that investors could also consider.
Invesco AI and Next Gen Software ETF (IGPT) track the STOXX WORLD AC NEXGEN SOFTWARE DEV ID and the iShares Expanded Tech-Software Sector ETF (IGV) track the S&P North American Technology-Software Index. Invesco AI and Next Gen Software ETF has $650.87 million in assets, iShares Expanded Tech-Software Sector ETF has $8.26 billion. IGPT has an expense ratio of 0.56% and IGV changes 0.39%.
Investors looking for cheaper, lower-risk options should consider traditional market cap ETFs that aim to match the returns of the technology ETFs
Visit Zacks ETF Center to learn more about this product and other ETFs, search for products that match your investment goals, and read articles on the latest developments in the ETF investing universe.
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State Street SPDR S&P Software & Services ETF (XSW): ETF Research Reports
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