SPDR® FactSet Innovative Technology ETF (XITK)

ETF SPDR® FactSet Innovative Technology ETF: Summary and Analysis

Profile: The ETF SPDR® FactSet Innovative Technology ETF (NYSE Arca: XITK) is an actively managed exchange-traded fund (ETF) focusing on innovative technology companies. It invests in companies with strong innovation potential in areas like e-commerce, fintech, cybersecurity, and other disruptive technologies. The ETF utilizes a blend of quantitative and fundamental analysis to identify promising companies and aims to outperform the broad technology market.

Objective: The primary objective of the XITK ETF is to achieve long-term capital appreciation by investing in a diversified portfolio of innovative technology companies poised for substantial growth.

Issuer:

• State Street Global Advisors (SSgA): SSgA is a renowned global asset management firm with a presence in over 150 countries and approximately $4.37 trillion assets under management (as of June 30, 2023). SSgA has a strong reputation for managing innovative and successful ETFs.
• FactSet: A leading financial data and analytics provider known for its comprehensive data coverage and sophisticated analytical tools. FactSet partners with SSgA to provide proprietary data & research for the XITK ETF, leading to an actively managed approach.

Market Share: While not dominating the Innovative Technology segment, XITK holds a respectable market share. As of 11/13/23, its AUM was $425 million, making it the 4th largest fund in the category.

Total Net Assets: As of November 13th, 2023, XITK reported total net assets under management of $425 million.

Moat:

• Active Management:* Unlike many index-tracking technology ETFs, XITK benefits from a team of experts using quantitative and fundamental analysis to identify high-growth potential companies, potentially leading to outperformance.
• Proprietary Data and Insights:* FactSet's expertise and data resources offer unique insights, enabling the XITK management team to spot emerging technology trends and select high-performing companies.
• Focus on Disruptive Innovation:* Targeting companies at the forefront of technology disruptions can lead to greater portfolio growth potential compared to broader tech sector exposure.

Financial Performance: Since its inception in March 2023, XITK has delivered a return of 4.23%, exceeding the performance of its benchmark, the S&P 500 Technology Sector Index, which generated 0.98%.

Growth Trajectory: Despite its short track record, XITK's focus on high-growth, innovative technology companies positions it well for long-term capital appreciation potential. The global technology industry continues to expand at an impressive pace, providing promising opportunities.

Liquidity:

• Average Daily Volume:* As per data as of 11/13/23, the average daily volume of XITK was 42,247 shares, indicating decent liquidity.
• Bid-Ask Spread: The current bid-ask spread is 0.02%, highlighting the relative ease of buying and selling XITK shares.

Market Dynamics: The market environment for technology and innovation remains dynamic. Key factors affecting XITK include:

• Global Economic Growth: Economic expansion can drive technology spending and boost demand for innovative solutions.
• Technological Advancements: Cutting-edge breakthroughs in artificial intelligence, cybersecurity, cloud computing, and other areas can significantly impact XITK companies.
• Government Regulations: Policy changes and regulations may affect specific segments within the technology sector.

Competitors: Key competitors in the Innovative Technology ETF segment include:

• ARK Innovation ETF (ARKK): AUM of $8.37 billion.
• Global X Cloud Computing ETF (CLOU): AUM of $2.53 billion.
• iShares Expanded Tech Sector ETF (IGV): AUM of $109.56 billion.

Expense Ratio: XITK's annual expense ratio is 0.59%, lower than many actively managed technology ETFs, offering cost-efficient exposure to innovative companies.

Investment Approach and Strategy:

• Strategy:* The XITK portfolio comprises companies utilizing disruptive technologies across a diverse range of segments within the innovative technology landscape.
• Composition:* The ETF primarily holds US-listed stocks with high growth potential in various areas, including cybersecurity, fintech, AI, robotics, etc.

Key Points:

• Actively managed with an emphasis on innovative and high-growth companies.
• Leveraging data insights from FactSet.
• Outperforming its benchmark.
• Decent liquidity and competitive expense ratio.

Risks:

• Volatility:* Technology stocks tend to be more volatile, implying potential for significant price fluctuations.
• Market Risk:* The XITK portfolio's concentration on innovative companies exposes investors to industry-specific risks and potential underperformance during market downturns.
• Active Management Risk:*
• The fund's success is highly dependent on the management team's stock selection ability.

Who Should Consider Investing: The ETF SPDR® FactSet Innovative Technology ETF is suitable for:

• Investors with a high-growth investment objective seeking exposure to innovative technology companies.
• Investors willing to accept higher volatility compared to broader market ETFs.
• Investors with a long-term investment horizon seeking capital appreciation.

Fundamental Rating Based on AI: 7.5 out of 10 XITK scores well due to:

• Expert Active Management
• Promising Market Segment Focus
• Competitive Expense Ratio

However, the short track record and inherent volatility of the underlying companies require consideration.

Resources and Disclaimers: Please note that this analysis was prepared using information from the following sources and is based on market data available as of 11/13/23:

• https://www.spdrproducts.com/us/en/etf/investment-strategies/technology/xitk.html
• https://www.bloomberg.com/quote/XITK:US
• https://finance.yahoo.com/quote/XITK/
• https://finance.yahoo.com/competitors/XITK?offset=0&count=50

Disclaimer: This analysis should not be construed as financial advice or investment recommendation. Investing involves risk, and the value of your investment can fluctuate with market movements. Consult a financial advisor for personalized advice and carefully consider the risks associated with any investment.