SPXT: Ex-Tech S&P 500 ETF Outperforming This Year Has Imperfections, A Hold

Why It Matters

SPXT’s hidden tech exposure limits its ability to provide true diversification, making it unlikely to outperform the benchmark while offering only modest downside protection for investors.

Key Takeaways

• SPXT excludes core IT but retains quasi‑tech exposure.
• Holds 13.2% of assets in communication‑sector tech names.
• Lower growth and value metrics versus IVV.
• Downside capture around 93%, offering modest protection.
• Small AUM and low expense ratio limit scale.

Pulse Analysis

The S&P 500’s technology weighting has risen from under 6 % in the early 1990s to more than a third today, turning the index into a proxy for the AI‑driven growth narrative. This concentration has sparked demand for “de‑tech” products that can deliver exposure to the broader market while muting the volatility of high‑beta tech names. ProShares’ S&P 500 Ex‑Technology ETF (SPXT) was launched to meet that need, stripping out the GICS IT sector and promising a lower‑beta, value‑tilted profile for investors wary of inflation‑sensitive stocks.

In practice, SPXT’s portfolio tells a more nuanced story. Although it removes pure‑play IT stocks such as Microsoft and NVIDIA, the fund still carries sizable positions in communication‑sector giants like Alphabet and Amazon, which together account for over 13 % of assets. This hidden tech exposure preserves much of the index’s sensitivity to interest‑rate cycles and oil price shocks, reflected in a downside‑capture ratio just below 94 %. Moreover, the exclusion of high‑growth tech reduces weighted‑average earnings yield and forward revenue growth, leaving the fund lagging the benchmark on both total and risk‑adjusted returns.

For investors, SPXT offers modest defensive benefits—a shallower drawdown during the 2022 bear market and a low expense ratio of nine basis points—but the trade‑off is muted upside in a recovering economy. Its relatively small asset base of $266 million may also constrain liquidity during market stress. Alternatives such as broader low‑volatility ETFs or sector‑balanced funds can provide similar downside protection without the hidden tech tilt. As the macro environment evolves, the fund’s hold rating reflects the view that its risk‑adjusted profile is unlikely to outperform the core S&P 500 over the near term.