SSGA cuts fees on four SPDR ETFs

Sep 6th, 2018 | By | Category: Alternatives / Multi-Asset

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State Street Global Advisors has reduced the expense ratios on four SPDR ETFs, effective 4 September 2018.

SSGA cuts fees on four SPDR ETFs

The four SPDR funds with new lower expense ratios collectively house approximately $1.9 billion in assets under management.

The four funds, which collectively house approximately $1.9 billion in assets under management, consists of two passive ETFs and two actively managed ETFs of ETFs.

The passive funds provide exposure to international government bonds and US municipal bonds, while the actively managed ETF portfolios offer multi-asset exposure targeting real returns and a high level of income.

“We are constantly evaluating the SPDR ETF lineup to meet client demand,” said Noel Archard, Global Head of SPDR Product at State Street Global Advisors.

He added, “In reducing the expense ratios of these four SPDRs we help lower the total cost of ownership for our clients and ensure the funds are well positioned for growth in the current market.”

All four ETFs are listed on NYSE Arca.

International Treasuries

The SPDR Bloomberg Barclays International Treasury Bond ETF (BWX US) has has its expense ratio reduced from 0.50% to 0.35%. The fund tracks the Bloomberg Barclays Global Treasury ex-US Capped Index, providing exposure to fixed-rate local currency sovereign debt of investment grade countries outside the United States.

The underlying index includes bonds from across the duration spectrum with maturities greater than one year eligible for selection. The index’s option-adjusted duration is 8.1 years, and it is yielding 1.3%.

Bonds from Japan account for just under a quarter (23.1%) of the total index weight, followed by bonds issued by France (6.0%), the UK (5.6%), Italy (5.3%), and Spain (4.6%). Bonds rated A represent the largest credit quality bucket within the index with a weight of 37.1%. Bonds rated AAA and AA each make up roughly a quarter of the total exposure, with approximately 12% in bonds rated BBB.

BWX is by far the largest of the four ETFs, boasting over $1.1bn in AUM. Income is distributed to investors on a monthly basis.

US municipal bonds

The SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB US) has had its expense ratio reduced from 0.45% to 0.35%. The fund has over $530m in AUM. It tracks the S&P Municipal Yield Index, providing exposure to mostly high yield  or non-rated municipal bonds issued by US states, the District of Columbia, US territories, and local governments or agencies.

The index has a yield-to-maturity of 5.0% and a duration of 7.7 years. The largest state or territory exposures are California (12.6%), Illinois (11.3%), New York (7.2%), Puerto Rico (6.5%), and Florida (6.2%). Approximately a third of bonds in the index are rated below BBB, while a further third are considered ‘not rated’. One-fifth (20.1%) of the total index weight is allocated to bonds rated BBB.

Multi-asset

The SPDR SSGA Multi-Asset Real Return ETF (RLY US) has had its expense ratio reduced from 0.70% to 0.50%. The fund has AUM of $140m and seeks to achieve a real return consisting of capital appreciation and current income primarily through investing in other SPDR ETFs.

It provides exposure to inflation-protected securities issued domestically and internationally, domestic and international real estate securities, commodities, and publicly traded companies in natural resources and commodity businesses. These companies may include agriculture, energy, and metals and mining companies.

The strategy relies on a proprietary quantitative model as well as the manager’s fundamental views regarding factors that may not be captured by the quantitative model.

Income allocation

The SPDR SSGA Income Allocation ETF (INKM US) has had its expense ratio reduced from 0.70% to 0.50%. The fund is the smallest of the four ETFs with AUM of $93m.

The fund seeks to provide total return by focusing on yield-generating assets. It also gains its exposure through investing primarily in other SPDR ETFs. The strategy combines tactical allocations among US government and corporate bonds, US convertible and preferred securities, global REITs, and domestic and international equities with a focus on dividends.

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