SPXT: No IT Exposure Means Weak Upside Capture, Outperformance Unlikely

I maintain the Hold rating on the ProShares S&P 500 Ex-Technology ETF. SPXT aims to address the S&P 500's IT sector concentration issue but falls short of delivering alpha. SPXT cannot fully eliminate tech-like exposures, and the removal of GICS IT names reduces upside capture, impairing cumulative and risk-adjusted returns. SPXT's portfolio has larger exposure to value and low volatility than IVV, yet it lags on the GARP front, which is its key vulnerability. Owing to the factor mix, it is unlikely that SPXT will be able to beat IVV this year.

Today, I would like to explain why I still expect the ProShares S&P 500 Ex-Technology ETF ( SPXT ), which I previously assessed in March, to underperform the iShares Core S&P 500 ETF.