SPDR targets high-growth technology sector with new ETF

Jan 27th, 2016 | By | Category: Equities

State Street Global Advisors (SSGA), a leading exchange-traded fund provider, has increased its range of sector-targeted ETFs in the US with the launch of the SPDR FactSet Innovative Technology ETF (NYSE Arca: XITK) on NYSE Arca.

The ETF invests in the equity of companies within the technology sector and the electronic media sub-sector that are exhibiting high revenue growth. It tracks the performance of the FactSet Innovative Technology Index, a collection of 85 US-listed stocks and American Depository Receipts. This includes firms engaged in cutting edge research, product innovation and service development. The index applies an equal dollar weighting to its constituents, a strategy that has historically enhanced risk-adjusted returns of portfolios compared to market-weighted approaches.

SSGA targets high-growth Technology equities with new SPDR ETF

Constituents of the newly launched SPDR FactSet Innovative Technology ETF (NYSE Arca: XITK) include Rovi, Google, Yelp and PMC Sierra.

Nick Good, chief operating officer of the US intermediary business at State Street Global Advisors, said: “In today’s low growth environment, investors have expressed a desire to access companies with the greatest potential to create change. XITK provides exposure to technology-related companies with high revenue growth, including those with disruptive business models… This means investing beyond the stalwarts of the tech space and capturing newer firms that are innovating and changing the landscape.”

Jeremy Zhou, FactSet Indexes Senior Product Manager, commented: “This FactSet index leverages our patented US sector classification system to uniquely identify technology-related companies in new, rapidly evolving areas, such as mobile devices, cyber security and cloud computing. Partnering with SSGA to track such potentially disruptive companies through a transparent, rule-based methodology may offer an exciting new way to target emerging industries with a stronger overall growth profile.”

As of 1 January 2015, the index is composed of securities primarily in the software (46.6%), consumer media (31.3%) and electronic components (14.0%) sectors. The fund carries a total expense ratio of 0.45%.

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