Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Technology Select Sector SPDR XLK offers investors broad exposure to the technology sector. As a sector-specific exchange-traded fund, XLK should be viewed as a tactical investment, suitable only for the satellite portion   Read more 

Bull Case

About 93% of XLK's investments are in companies that have wide or narrow Morningstar Economic Moat Ratings--firms that Morningstar's equity analysts believe have durable competitive advantages.
The top holdings in this fund have strong balance sheets, which should support continued investment in research and development and growth strategies.
This fund is the most liquid of any technology sector ETF. Read more 

Bear Case

The top-10 holdings account for 60% of this fund's portfolio, which means that its performance and risk attributes are closely tied to just a handful of stocks.
A pullback in IT spending could weigh on the performance of this ETF. Some of this ETF's companies will be negatively affected by what many are calling a secular decline in PC demand.
The companies in this ETF operate in highly competitive industries characterized by rapid innovation that could erode a company's economic moat. Read more 

Are There Viable Alternatives to Traditional Bond ETFs? 
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