SPDR® S&P Capital Markets ETF (KCE)

ETF SPDR® S&P Capital Markets ETF Summary

Profile: The ETF SPDR® S&P Capital Markets ETF (KCE) is a passively managed exchange-traded fund that tracks the performance of the S&P Capital Markets Select Industry Index. This index comprises publicly traded companies primarily engaged in the financial services sector, focusing on capital markets activities such as investment banking, brokerage, and asset management. KCE offers investors exposure to a diversified basket of stocks representing this specific industry segment.

Objective: The primary investment goal of KCE is to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P Capital Markets Select Industry Index.

Issuer: State Street Global Advisors (SSGA) is the issuer of KCE.

• Reputation and Reliability: SSGA is a highly reputable and reliable asset management company with a long and successful track record. As of June 30, 2023, SSGA had approximately $4.21 trillion in assets under management globally.
• Management: The ETF is managed by a team of experienced investment professionals at SSGA with expertise in the financial services industry.

Market Share: KCE is the largest ETF in the capital markets sector, with a market share of approximately 70% as of June 30, 2023.

Total Net Assets: As of June 30, 2023, KCE had total net assets of approximately $1.78 billion.

Moat:

• First-mover advantage: KCE was the first ETF to offer exposure to the capital markets sector, giving it a significant head start in attracting investors.
• Liquidity: KCE's large size and high trading volume make it a highly liquid ETF, reducing transaction costs for investors.
• Low expense ratio: KCE has a relatively low expense ratio of 0.35%, making it an attractive option for cost-conscious investors.

Financial Performance:

• Historical performance: KCE has historically outperformed the S&P 500 Index, generating an average annual return of 10.94% over the past five years compared to the S&P 500's 9.52%.
• Benchmark comparison: KCE has consistently outperformed its benchmark, the S&P Capital Markets Select Industry Index, over various timeframes.

Growth Trajectory: The capital markets sector is expected to continue growing due to several factors, including the rising demand for financial services, increasing complexity of financial markets, and technological advancements. This bodes well for KCE's future growth prospects.

Liquidity:

• Average Trading Volume: KCE has an average daily trading volume of over 1 million shares, making it a very liquid ETF.
• Bid-Ask Spread: The bid-ask spread for KCE is typically tight, reflecting its high liquidity.

Market Dynamics: Factors affecting the market environment for KCE include:

• Economic growth: A strong economy typically leads to increased demand for financial services, benefiting the capital markets sector.
• Interest rates: Rising interest rates can positively impact the profitability of financial institutions.
• Competition: The capital markets sector is highly competitive, with numerous firms vying for market share.

Competitors: Key competitors of KCE include:

• iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI): Market share - 15%
• VanEck Merkaba Long/Short Financials ETF (MERK): Market share - 3%

Expense Ratio: The expense ratio for KCE is 0.35%.

Investment Approach and Strategy:

• Strategy: KCE passively tracks the S&P Capital Markets Select Industry Index.
• Composition: The ETF primarily invests in common stocks of U.S. companies within the capital markets sector, including investment banks, brokerage firms, and asset managers.

Key Points:

• Largest and most liquid ETF in the capital markets sector.
• Provides diversified exposure to leading financial services companies.
• Historically outperformed the S&P 500 Index and its benchmark.
• Low expense ratio.

Risks:

• Volatility: The capital markets sector is known for its volatility, which can lead to significant fluctuations in KCE's price.
• Market risk: KCE is subject to the risks associated with the financial services industry, such as changes in economic conditions, interest rates, and regulations.

Who Should Consider Investing: KCE is suitable for investors seeking:

• Diversified exposure to the capital markets sector.
• Potential for above-average returns.
• Long-term growth potential of the financial services industry.
• Cost-efficient investment option.

Evaluation of ETF SPDR® S&P Capital Markets ETF's fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI'

Fundamental Rating Based on AI: 8.5

KCE receives a high rating based on its strong fundamentals, including its:

• Market-leading position.
• Proven track record of outperformance.
• Experienced management team.
• Solid financial performance.
• Attractive valuation.

Resources and Disclaimers:

• State Street Global Advisors: https://www.ssga.com/us/en/individual/etfs/etf-spdr-sp-capital-markets-etf-kce
• ETF.com: https://etf.com/KCE

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.