Looking for broad exposure to the technology-software segment of the stock market? You should consider the State Street SPDR S&P Software & Services ETF (XSW), a passively managed exchange-traded fund that launched on September 28, 2011.
Retail and institutional investors are increasingly choosing passively managed ETFs because they offer low costs, transparency, flexibility and tax efficiency; These types of funds are also excellent vehicles for long-term investors.
Sector ETFs are also funds of convenience, offering many ways to gain diversified, low-risk exposure to a broad group of companies in certain sectors. Technology – Software is one of 16 broad Zacks sectors within the Zacks Industry Classification. It is currently ranked number 1, putting it in the top 6%.
The fund is sponsored by State Street Investment Management. It has amassed assets of more than $444.42 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.
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than higher cost products, assuming all other metrics remain 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 97.1% of the portfolio.
Looking at individual holdings, D Wave Quantum Inc (QBTS) accounts for approximately 1.52% of total assets, followed by Cleanspark Inc (CLSK) and Cipher Mining Inc (CIFR).
The top 10 holdings account for approximately 11.36% of the total assets under management.
The ETF has added about 1.51% so far this year and is down about 4.03% over the past year (as of 12/08/2025). The last 52-week period has traded between $141.65 and $205.24.
The ETF has a beta of 1.15 and a standard deviation of 24.89% for the trailing three-year period, making it a high-risk pick in this area. With approximately 142 investments, the company effectively diversifies company-specific risk.
State Street SPDR S&P Software & Services ETF has a Zacks ETF Rank of 2 (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 $640.59 million in assets, iShares Expanded Tech-Software Sector ETF has $8.53 billion. IGPT has an expense ratio of 0.56% 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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State Street 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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