Coming into Thursday, the Technology Select Sector SPDR (NYSEArca: XLK) was up just half a percent this year, a middling performance that placed the largest technology sector fifth among the nine sector SPDR exchange traded funds on a year-to-date basis.

The $12.8 billion XLK, the second-largest of the nine sector SPDRs behind only the Financial Select Sector SPDR (NYSEArca: XLF), is known for, among other things, holding one of the largest weights to Apple (NasdaqGS: AAPL) among all ETFs. With its ongoing surge, one that has taken its market value north of $726 billion, Apple is XLK’s largest holding at a weight of nearly 18%. That is more than double the 8.3% weight XLK assigns to its second-largest holding, Microsoft (NasdaqGS: MSFT). [Apple’s Ascent and its ETF Impact]

AltaVista Research has a neutral rating on XLK, but that rating is not as tepid as it sounds. The research firm’s neutral rating implies “average appreciation potential. A rating of NEUTRAL is assigned to funds with ALTAR Scores between 6.0% and 8.0%. This indicates that valuations adequately reflect the fundamentals of stocks in these funds. The majority of funds we cover fall into this category,” said AltaVista in a note out Thursday.

Investors are missing out on XLK. The ETF gained 17.8% last year, outpacing the S&P 500 by 430 basis points, while more than $1.5 billion was pulled from the fund. Another $555 million has been yanked from XLK this year, indicating that perhaps some investors are concerned about the technology sector’s valuations. However, AltaVista notes XLK has the traits of a value bet. [Tech ETFs for Growth]

“Tech seems to have become a new Value sector. Growth has slowed, but long-term growth forecasts still far exceed those for the S&P500 while margins & ROE remain impressively high. Unlike many sectors valuations have not drifted much higher since 2009. As a result, Tech trades at a P/E discount to the S&P500 whereas historically it has enjoyed a premium. We think Tech appears relatively attractive at these levels,” said the research firm.

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