Designed to provide broad exposure to the Industrials ETFs category of the market, the SPDR S&P Transportation ETF (XTN) is a smart beta exchange traded fund launched on 01/26/2011.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
The fund is managed by State Street Global Advisors, and has been able to amass over $240.72 million, which makes it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, XTN seeks to match the performance of the S&P Transportation Select Industry Index.
The S&P Transportation Select Industry Index represents the transportation segment of the S&P Total Market Index.
Cost & Other Expenses
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for XTN are 0.35%, which makes it one of the least expensive products in the space.
XTN’s 12-month trailing dividend yield is 0.75%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund’s holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector – about 100% of the portfolio.
When you look at individual holdings, Xpo Inc (XPO) accounts for about 2.87% of the fund’s total assets, followed by Saia Inc (SAIA) and Arcbest Corp (ARCB).
XTN’s top 10 holdings account for about 25.81% of its total assets under management.
Performance and Risk
The ETF has added roughly 19.82% and is up about 4.19% so far this year and in the past one year (as of 08/22/2023), respectively. XTN has traded between $63.53 and $88.03 during this last 52-week period.
The fund has a beta of 1.35 and standard deviation of 26.07% for the trailing three-year period, which makes XTN a high risk choice in this particular space. With about 48 holdings, it has more concentrated exposure than peers.
Alternatives
SPDR S&P Transportation ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
IShares U.S. Transportation ETF (IYT) tracks Dow Jones Transportation Average Index and the U.S. Global Jets ETF (JETS) tracks U.S. Global Jets Index. IShares U.S. Transportation ETF has $1.11 billion in assets, U.S. Global Jets ETF has $1.58 billion. IYT has an expense ratio of 0.39% and JETS charges 0.60%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
Bottom Line
To 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.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
SPDR S&P Transportation ETF (XTN): ETF Research Reports
iShares U.S. Transportation ETF (IYT): ETF Research Reports
XPO, Inc. (XPO) : Free Stock Analysis Report
ArcBest Corporation (ARCB) : Free Stock Analysis Report
Saia, Inc. (SAIA) : Free Stock Analysis Report
U.S. Global Jets ETF (JETS): ETF Research Reports
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Image and article originally from www.nasdaq.com. Read the original article here.