State Street Global Advisors (SSGA) has lowered the fees charged on its suite of ETFs providing exposure to the various sectors of the US large-cap equity market.
SSGA’s suite of GICS-defined S&P 500 sector ETFs currently houses over $257bn in assets.
Each of the funds in the 11-strong suite now comes with an expense ratio of 0.10%, down from 0.12%.
Collectively, the suite houses over $257 billion in assets under management, translating to an annual saving of $51.4 million for investors at current asset levels.
Sector ETFs are typically used by investors to implement sector rotation strategies or to effect simple adjustments to core equity exposures in light of changes in the economic cycle or market outlook.
SSGA’s offering is based on sub-indices of the S&P 500 that target stocks from the communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, materials, real estate, technology, or utilities sectors according to the Global Industry Classification Standard (GICS).
The eleven sector sub-indices collectively comprise all of the companies in the S&P 500. Constituents are weighted by float-adjusted market capitalization.
Each ETF in the suite is sizable with the smallest – The Real Estate Select Sector SPDR Fund (XLRE US) – housing $5.6bn. The largest ETFs include The Financial Select Sector SPDR Fund (XLF US) and The Technology Select Sector SPDR Fund (XLK US) which have $48.7bn and $47.3bn in assets, respectively.
The 11 Select Sector SPDR Funds are listed below alongside their AUM:
The Communication Services Select Sector SPDR Fund (XLC US); $12.5bn
The Consumer Discretionary Select Sector SPDR Fund (XLY US); $20.2bn
The Consumer Staples Select Sector SPDR Fund (XLP US); $15.3bn
The Energy Select Sector SPDR Fund (XLE US); $35.0bn
The Financial Select Sector SPDR Fund (XLF US); $48.7bn
The Health Care Select Sector SPDR Fund (XLV US); $34.4bn
The Industrial Select Sector SPDR Fund (XLI US); $16.8bn
The Materials Select Sector SPDR Fund (XLB US); $7.7bn
The Real Estate Select Sector SPDR Fund (XLRE US); $5.6bn
The Technology Select Sector SPDR Fund (XLK US); $47.3bn
The Utilities Select Sector SPDR Fund (XLU US); $13.5bn
Following the fee cut, the ETFs are now on par with Vanguard‘s US sector suite which houses around $235bn in assets and also consists of 11 funds spliced according to GICS. Vanguard’s ETFs are, however, based on the MSCI USA Investable Market Index which includes large, mid, and small-cap stocks, covering approximately 99% of US equity market capitalization.
Cost-conscious investors may obtain even cheaper exposure to GICS-defined US equity sectors through ETFs offered by Fidelity. Fidelity’s suite, which is also based on the MSCI USA IMI, houses approximately $15bn in assets; each fund comes with an expense ratio of just 0.084%.
Index providers S&P Dow Jones Indices and MSCI, which co-developed GICS, are expected to announce the results of their recent consultation on potential changes to the industry taxonomy later this month. While the current GICS consultation covers seven topics, two areas have the potential to significantly affect ETF investors: the reclassifications of renewable energy companies and firms involved in data processing and outsourced services.