Launched on November 9, 2022, the Xtrackers S&P 100 Ex Top 20 ETF (XOEX) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by Deutsche Bank Ag. It has amassed assets over $287.46 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

Costs

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 this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.47%.

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 to the Healthcare sector -- about 20.1% of the portfolio. Financials and Industrials round out the top three.

Looking at individual holdings, Mastercard Inc-Class A (MA) accounts for about 3.03% of total assets, followed by Abbvie Inc (ABBV) and Bank Of America Corp (BAC).

The top 10 holdings account for about 25.18% of total assets under management.

Performance and Risk

XOEX seeks to match the performance of the S&P 100 EX-TOP 20 SELECT INDEX before fees and expenses. The S&P 100 Ex-Top 20 Select Index measures the performance of companies in the S&P 100, excluding the largest 20 companies as ranked by float market cap.

The ETF has gained about 11.36% so far this year. In the past 52-week period, it has traded between $34.77 and $41.99.

The ETF has a beta of 0.86. With about 83 holdings, it effectively diversifies company-specific risk.

Alternatives

Xtrackers S&P 100 Ex Top 20 ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XOEX is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Morningstar Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $112.84 billion in assets, Vanguard Morningstar Value ETF has $189.98 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.03%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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.

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Xtrackers S&P 100 Ex Top 20 ETF (XOEX): ETF Research Reports

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

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