SSGA enters fee war with ultra-low-cost SPDR Portfolio ETFs

Oct 17th, 2017 | By | Category: ETF and Index News

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State Street Global Advisors (SSGA) has unveiled the SPDR Portfolio ETFs, a suite of “ultra-low-cost” ETFs that aims to assist investors in the construction of a core portfolio strategy. Comprising 15 existing funds with reduced expense ratios, the SPDR Portfolio ETFs provide access to a range of asset classes including fixed income, and US, emerging market and international equity.

SSGA enters fee war with ultra-low-cost SPDR Portfolio ETFs

SSGA has slashed fees across 15 ETFs to as low as three basis points.

“State Street Global Advisors has continually looked for opportunities to help investors build better portfolios with ETFs,” said Nick Good, co-head of the global SPDR business at SSGA. “Investors have been asking us to provide these solutions to offer them a greater choice for low-cost ETFs. The launch of the SPDR Portfolio ETFs provides a solution that meets this growing demand.”

“Research has long shown that asset allocation decisions explain over 90% of the variance in portfolio returns,” added Matt Bartolini, head of SPDR Americas Research. “Simply put, it all starts with asset allocation. And today’s low return expectations make building an ultra-low-cost, diversified core more important than ever, as costs accumulate over time, eroding a portfolio’s total return.”

The range of SPDR Portfolio ETFs, along with their new total expense ratios (TERs), include:

SPDR Portfolio Total Stock Market ETF (SPTM). TER – 0.03%
SPDR Portfolio Large Cap ETF (SPLG). TER – 0.03%
SPDR Portfolio Mid Cap ETF (SPMD). TER – 0.05%
SPDR Portfolio Small Cap ETF (SPSM). TER – 0.05%
SPDR Portfolio S&P 500 Growth ETF (SPYG). TER – 0.04%
SPDR Portfolio S&P 500 Value ETF (SPYV). TER – 0.04%
SPDR Portfolio S&P 500 High Dividend ETF (SPYD). TER – 0.07%
SPDR Portfolio World ex-US ETF (SPDW). TER – 0.04%
SPDR Portfolio Emerging Markets ETF (SPEM). TER – 0.11%
SPDR Portfolio Aggregate Bond ETF (SPAB). TER – 0.04%
SPDR Portfolio Long Term Corporate Bond ETF (SPLB). TER – 0.07%
SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB). TER – 0.07%
SPDR Portfolio Short Term Corporate Bond ETF (SPSB). TER – 0.07%
SPDR Portfolio Long Term Treasury ETF (SPTL). TER – 0.06%
SPDR Portfolio Short Term Treasury ETF (SPTS). TER – 0.06%

“Each fund in the SPDR Portfolio suite is priced equal to or below the lowest fee ETF in the category,” said Rory Tobin, co-head of the global SPDR business at SSGA. “Some of these changes in price are significant – such as offering emerging markets exposure at 11 basis points. In addition, these funds have a combined total of over $11 billion in assets and trade actively, so there is no incubation period needed.”

Commenting on the extensive fee cuts, Todd Rosenbluth, director of ETF & mutual fund research with CFRA, said: “With its slashing of fees for a variety of ETFs, many tied to prominent indices, SSGA has aggressively crashed the low-fee ETF party consisting of iShares, Vanguard and Schwab.

“However, while those firms have been bringing down expenses ratios by a basis point or two in recent years, some of the SSGA ETF cuts were by ten basis points or more, including international equity ETFs trading under new tickers SPDW and SPEM. Though we have not believed other moves were part of a fee war, SSGA is heading us down a path of no retreat.”

The 15 SPDR Portfolio ETFs will all be available to purchase commission free on TD Ameritrade’s ETF Market Center.

“TD Ameritrade has been a great collaborator,” said Good. “With their help, and by repurposing existing SPDR ETFs, we have been able to offer investors a very compelling solution for their portfolios.”

Coinciding with the launch of the SPDR Portfolio ETFs, SSGA has introduced three new proprietary indices to underlie three of the funds within the suite. The following index changes are effective as of 16 November 2017:

The SPDR Portfolio Total Stock Market ETF (SPTM) will switch from tracking the Russell 3000 Index to the SSGA Total Stock Market Index.
The SPDR Portfolio Large Cap ETF (SPLG) will switch from tracking the Russell 1000 Index to the SSGA Large Cap Index.
The SPDR Portfolio Small Cap ETF (SPSM) will switch from tracking the Russell 2000 Index to the SSGA Small Cap Index.

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