State Street expands popular SPDR Select Sector ETF range

Oct 13th, 2015 | By | Category: Equities

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State Street Global Advisors (SSGA), the asset manager behind the SPDR brand of exchange-traded funds, has expanded their range of sector-specific SPDR ETFs by introducing two new funds that track firms operating in the US financial services and the real estate space respectively.

The inclusion of the Financial Services Select Sector SPDR Fund (XLFS) and the Real Estate Select Sector SPDR Fund (XLRE) bring the number of ETFs within the suite to eleven, broadening the options for investors making sector allocations within the S&P 500.

SPDR Select Sector ETF range grows with new offerings

James Ross, executive vice president and global head of SPDR Exchange Traded Funds.

The launch of these new funds has been driven by revisions to the Global Industry Classification Standard (GICS) structure announced by S&P Dow Jones Indices that will be implemented in August 2016.

James Ross, executive vice president and global head of SPDR Exchange Traded Funds at State Street Global Advisors, commented: “As investors continue to expand their uses of sector ETFs, they are interested in gaining more granular exposure to financial companies, in particular being consistent with evolutions in the GICS standards. For those looking to maintain broad-based exposure to financials, our existing Financial Select Sector SPDR (XLF), which provides the most liquid exposure to the broader financial sector, will remain unchanged.”

The promotion of real estate from an industry group within the financials sector highlights the fact that it is increasingly viewed as a distinct asset class and a growing part of global economies.

The net expense ratios of the funds will be 0.14%, matching the fees available across the SPDR sector suite. The ETF suite has proven very popular since its 1998 launch, holding over $84.3bn in assets under management across the range as of 30 September 2015. This has allowed State Street to reduce costs on the funds, providing an attractive and competitive rate for investors.

“When we launched Sector SPDRs in 1998, our expense ratio was 0.65 percent. As more and more institutional and now individual investors have incorporated Sector SPDRs into their investment strategies, we have been able to drive our overall expenses down,” said Dan Dolan, Director – Wealth Management Strategies, Select Sector SPDR Trust.

The Financial Services Select Sector SPDR Fund will track the Financial Services Select Sector Index, indicative of the performance of firms within the following industries: diversified financial services, insurance, banks, capital markets, consumer finance, thrifts and mortgage real estate investment trusts (REITs). The top holdings within the ETF, as of 8 October 2015, were Berkshire Hathaway (10.4%), Wells Fargo (10.2%), JP Morgan (9.6%), Bank of America (6.9%) and Citigroup (6.5%). The fund was concentrated in holdings of diversified banks (36.3%), followed by multi-sector holdings (10.7%), asset management and custodial banks (8.8%), regional banks (7.1%) and investment banks and brokerages (6.7%).

The new Real Estate Select Sector SPDR Fund will track the Real Estate Select Sector Index, which includes real estate management, development and REITs, with the exception of mortgage REITs. The top holdings within the ETF, as of 8 October 2015, were Simon Property Group (12.6%), American Tower Corporation (8.4%), Public Storage (6.7%), Equity Residential (5.9%), and Crown Castle International (5.7%). The fund sector distribution was concentrated in specialised REITs (30.1%) and retail REITs (23.0%), while residential REITs (15.3%), healthcare REITs (12.1%) and office REITs (10.0%) also played notable roles.

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