Is State Street SPDR S&P Telecom ETF (XTL) a Strong ETF Right Now?

Making its debut on 01/26/2011, smart beta exchange traded fund State Street SPDR S&P Telecom ETF (XTL) provides investors broad exposure to the Communication Services ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

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.

Methodologies like 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.

Fund Sponsor & Index

XTL is managed by State Street Investment Management, and this fund has amassed over $572.3 million, which makes it one of the average sized ETFs in the Communication Services ETFs. This particular fund seeks to match the performance of the S&P Telecom Select Industry Index before fees and expenses.

The S&P Telecom Select Industry Index is one of nineteen S&P Select Industry Indices, each designed to measure the performance of a narrow sub-industry or group of sub-industries as defined by the GICS.Companies in the Select Industry Indices are classified based primarily on revenues; however, earnings and market perception are also considered. The Telecom Index is a modified equal weight index.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.27%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

XTL's heaviest allocation is in the Information Technology sector, which is about 54.7% of the portfolio. Its Telecom and Energy round out the top three.

Taking into account individual holdings, Viasat Inc (VSAT) accounts for about 3.7% of the fund's total assets, followed by Arista Networks Inc (ANET) and Anterix Inc (ATEX).

Its top 10 holdings account for approximately 34.36% of XTL's total assets under management.

Performance and Risk

The ETF return is roughly 36.85% so far this year and is up about 75.29% in the last one year (as of 08/03/2026). In the past 52-week period, it has traded between $123.08 and $247.62

The fund has a beta of 1.15 and standard deviation of 26.19% for the trailing three-year period, which makes XTL a medium risk choice in this particular space. With about 42 holdings, it has more concentrated exposure than peers .

Alternatives

State Street SPDR S&P Telecom ETF is an excellent option for investors seeking to outperform the Communication Services ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Vanguard Communication Services Index Fund ETF Shares (VOX) tracks MSCI US Investable Market Telecommunication Services 25/50 Index and the State Street Communication Services Select Sector SPDR ETF (XLC) tracks COMMUNICATION SERVICES SELECT SECTOR IND. Vanguard Communication Services Index Fund ETF Shares has $5.58 billion in assets, State Street Communication Services Select Sector SPDR ETF has $21.87 billion. VOX has an expense ratio of 0.09% and XLC changes 0.08%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Communication Services 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

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This article originally published on Zacks Investment Research (zacks.com).

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