A Hidden Gem Among Internet ETFs

There are plenty of internet ETFs dedicated to Internet stocks, opening the possibility that some good funds in this arena can go overlooked. That is the case with the SPDR S&P Internet ETF (NYSEArca: XWEB).

XWEB is comprised of internet names taken from the S&P Total Market Index. The ETF tracks the S&P Internet Select Industry Index.

XWEB “seeks to track a modified equal weighted index which provides the potential for unconcentrated industry exposure across large, mid and small cap stocks,” according to State Street Global Advisors (SsgA).

More Analysis

After surging 37% last year, technology remains a favorite among investors, despite data suggesting technology stocks are relatively expensive as they trade at elevated price-to-earnings compared to the broader S&P 500. Roughly a third of global fund managers say they are overweight tech in their portfolios, according to a recent Bank of America Merrill Lynch survey.

“XWEB holds 68 stocks and follows the S&P Internet Select Industry Index. Like the other S&P select industry benchmarks, XWEB’s index is equally weighted, a methodology that helps limit single stock risk. None of XWEB’s holdings account for more than 2% of the fund’s weight. The weighted average market value of this internet fund’s holdings is less than $40 billion, indicating XWEB is not highly dependent on the Amazon’s and Facebook’s of the world as primary drivers of performance,” according to InvestorPlace.

Related: Two Tech Trends Shaping 2018