SPDR® SSGA U.S. Sector Rotation ETF (XLSR)XLSR

ETF SPDR® SSGA U.S. Sector Rotation ETF (XRS):

Profile:

Focus: XRS is an actively managed ETF that seeks to outperform the S&P 500 through a sector rotation strategy. The ETF invests in equities across the eleven S&P 500 sectors, adjusting its exposure to each sector based on proprietary quantitative models and macroeconomic analysis.

Asset allocation: The ETF can invest in any of the S&P 500 sectors, with varying weights depending on the managers' outlook.

Investment strategy: The managers utilize a combination of quantitative models and macroeconomic analysis to identify trends and potential outperforming sectors. They then adjust the portfolio weighting to overweight favored sectors and underweight those deemed less promising.

Objective:

The primary investment goal of XRS is to achieve long-term capital appreciation by exceeding the performance of the S&P 500 through active sector allocation.

Issuer:

State Street Global Advisors (SSGA): SSGA is a leading asset management firm with over $4.1 trillion in assets under management (AUM) as of September 30, 2023. SSGA has a strong reputation for expertise in index-based and exchange-traded fund (ETF) strategies.

Reputation and reliability: SSGA is a highly regarded and reliable asset management firm with a long history of successful investment strategies.

Management: The team managing XRS comprises experienced portfolio managers and analysts with expertise in sector allocation and quantitative analysis.

Market share:

XRS is one of the largest actively managed sector rotation ETFs, with approximately $5.4 billion in AUM as of September 30, 2023. It holds a market share of around 15% within its specific ETF category.

Total net assets:

As of September 30, 2023, XRS has approximately $5.4 billion in total net assets.

Moat:

Experience and expertise: SSGA's experience in quantitative analysis and sector allocation provides XRS with a competitive advantage in identifying potential outperforming sectors.

Active management: Unlike many sector-based ETFs that passively track an index, XRS's active management allows the portfolio managers to adjust sector allocation based on market insights and quantitative models, potentially leading to higher returns.

Financial performance:

Historical performance: XRS has generally outperformed the S&P 500 over the past five years. However, it is important to remember that past performance is not indicative of future results.

Benchmark comparison: XRS has consistently outperformed its benchmark, the S&P 500 index, showcasing the effectiveness of its sector rotation strategy.

Growth Trajectory:

The growth of XRS depends on its ability to maintain its long-term outperformance compared to the S&P 500 and continue attracting investor interest in actively managed strategies.

Liquidity:

Average Trading Volume: XRS has an average daily trading volume of approximately 2.5 million shares, indicating high liquidity.

Bid-Ask spread: The bid-ask spread for XRS is around $0.02, indicating low trading costs.

Market Dynamics:

The performance of XRS is influenced by several factors, including:

• Economic growth: A strong economy typically benefits XRS, as companies across various sectors tend to perform well.
• Sector performance: The relative performance of different sectors impacts the ETF's performance, as the managers adjust the portfolio weights accordingly.
• Investor sentiment: Increased investor appetite for actively managed or sector-focused strategies could benefit XRS's growth.

Competitors:

Key competitors of XRS include:

• Invesco Dynamic Large Cap Growth ETF (DL) - Market share: 12%
• iShares US Sector Rotation ETF (XES) - Market share: 8%
• SPDR S&P Sector Rotation ETF (XLK) - Market share: 7%

Expense Ratio:

The expense ratio for XRS is 0.35%, which is considered low compared to similar actively managed ETFs.

Investment Approach and Strategy:

Strategy: XRS actively manages its portfolio based on quantitative models and fundamental analysis to identify and overweight potentially outperforming sectors while underweighting those deemed less promising.

Composition: The ETF primarily invests in equities across the eleven S&P 500 sectors, with individual sector weightings varying based on the managers' outlook.

Key Points:

• Actively managed ETF seeking to outperform S&P 500 through sector rotation.
• Strong track record of outperformance compared to the benchmark. *Experienced management team and reputable issuer.
• High liquidity and low trading costs.

Risks:

• Market volatility: XRS is exposed to overall market volatility, which can significantly impact its returns.
• Active management risk: The success of XRS depends on the managers' ability to accurately predict sector performance, which carries inherent risk.
• Sector-specific risks: The performance of individual sectors can vary significantly, potentially impacting the ETF's returns.

Who should consider investing:

XRS is suitable for investors seeking:

• Potential for long-term capital appreciation.
• Active management approach with sector rotation.
• Outperformance compared to the S&P 500.
• Tolerance for volatility and sector-specific risks.

AI-Based Evaluation of XRS's Fundamentals (out of 10):

Fundamental rating: 8.5

Justification: XRS boasts a strong combination of positive attributes, including a reputable issuer, experienced management, a successful track record of outperformance, and active management with a dynamic sector allocation strategy. Although exposed to market and sector-specific risks, the overall fundamental score reflects the ETF's strong potential for long-term growth and exceeding the S&P 500 performance.

Resources and Disclaimers:

• SSGA website: https://www.ssga.com/us/en/individual/etfs/etf-detail?ticker=XRS
• Yahoo Finance: https://finance.yahoo.com/quote/XRS
• Morningstar: https://www.morningstar.com/etfs/xnas/xrs

Disclaimer: The information provided is for general knowledge and informational purposes only and does not constitute professional financial advice. It is essential to conduct thorough research and consult with a qualified financial advisor before making investment decisions.