ETF Education Report: State Street(R) SPDR(R) S&P(R) Telecom ETF (XTL)

What this ETF is trying to do

The XTL ETF is designed to track the performance of companies within the telecommunications sector. This means it holds a variety of stocks in businesses that handle communication technologies. According to the provided data, this ETF holds 40 different companies.

Top Holdings

Because the list provided is a partial list of the largest holdings, these are the top companies in the portfolio:

• Bandwidth Inc Class A (3.63%)

• Ubiquiti Inc (3.31%)

• Digi International Inc (3.28%)

• Arista Networks Inc (3.17%)

• Ciena Corp (3.16%)

• Netscout Systems Inc (3.16%)

• Extreme Networks Inc (3.08%)

• Iridium Communications Inc (3.08%)

• Viasat Inc (3.06%)

• Ondas Inc (3.05%)

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return (how much the share price changed) and total return (the share price change plus any cash distributions received).

• Year-to-Date (YTD): The price return is approximately 39.33%, while the total return is approximately 40.56%.

• One Year: The price return was approximately 44.22%, and the total return was approximately 45.59%.

• Three Year: The price return was approximately 217.52%, and the total return was approximately 227.16%.

To give you an idea of price movement, the current price is $213.48. The estimated price from roughly one year ago was approximately $148.02.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. XTL has a distribution yield of approximately 0.90%. This means the cash distributed is about 0.90% of the ETF's price. The fund usually pays these out quarterly, and it has made 4 payments over the last 12 months.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the ETF decreases significantly. It is important to remember that a falling share price is not the same thing as NAV erosion. For this ETF, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this fund.

Pros

• The ETF has shown significant positive price returns over the one-year and three-year periods.

• The data shows no detected price erosion.

Cons

• The distribution yield is relatively low at approximately 0.90%.

Beginner takeaway

XTL tracks the telecom sector and has recently seen growth in both its share price and its total return. While it does pay a distribution, the yield is modest compared to some other types of funds. Always remember that price returns and total returns are different, and looking at both helps you see the full picture of how an ETF has performed.