Looking for broad exposure to the technology-software segment of the stock market? You should consider the SPDR S&P Software & Services ETF (XSW), a passively managed exchange-traded fund that launched on September 28, 2011.
Passively managed ETFs are becoming increasingly popular with both institutional and retail investors due to their low costs, transparency, flexibility and tax efficiency. They are excellent instruments for long-term investors.
Sector ETFs also give investors access to a broad group of companies in certain sectors that offer low risk and diversified exposure. Technology – Software is one of 16 broad Zacks sectors within the Zacks Industry Classification. It currently ranks third, putting it in the top 19%.
The fund is sponsored by State Street Investment Management. It has amassed assets of more than $483.07 million, making it one of the mid-sized ETFs trying to match the performance of the technology-software segment of the stock market. XSW aims to match the performance of the S&P Software & Services Select Industry Index, excluding fees and expenses.
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.
The annual operating expense for this ETF is 0.35%, making it one of the least expensive products on the market.
It has a 12-month rolling dividend yield of 0.06%.
While ETFs provide diversified exposure, minimizing risk on individual stocks, taking an in-depth look at a fund’s holdings is a valuable exercise. And most ETFs are highly transparent products that disclose their holdings daily.
This ETF has the largest allocation in the information technology sector: approximately 96.1% of the portfolio.
Looking at individual holdings, Cipher Mining Inc (CIFR) accounts for approximately 1.9% of total assets, followed by Terawulf Inc (WULF) and Unity Software Inc (U).
The top 10 holdings account for approximately 12.78% of the total assets under management.
Year-to-date, the SPDR S&P Software & Services ETF return is approximately 5.08% year to date, and is up approximately 25.92% over the past 12 months (as of 8/10/2025). XSW has traded between $141.65 and $205.24 over the past 52 weeks.
The ETF has a beta of 1.19 and a standard deviation of 25.88% for the trailing three-year period, making it a high-risk pick in this area. With approximately 139 investments, the company effectively diversifies company-specific risk.
SPDR S&P Software & Services ETF has a Zacks ETF Rank of 1 (Strong Buy), which is based on the asset class’s expected return, expense ratio and momentum, among other factors. This makes XSW an excellent option for investors looking for exposure to the technology ETF segment of the market. There are other complementary 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 $583.36 million in assets, iShares Expanded Tech-Software Sector ETF has $9.80 billion. IGPT has an expense ratio of 0.58% and IGV charges 0.39%.
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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SPDR S&P Software & Services ETF (XSW): ETF Research Reports
This article was originally published on Zacks Investment Research (zacks.com).
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