Signage outside the State Street Corp. Global Advisors Global Advisors building in Boston, Massachusetts, U.S., on Tuesday, Jan. 18, 2022.
Scott Eisen | Bloomberg | Getty Images
State Street, the asset management giant, announced on Tuesday that it is reducing the fees for a group of core ETFs, impacting approximately half of the SPDR Portfolio ETF suite. These funds focus on U.S. stocks, foreign stocks, and fixed income. With a combined total of $77 billion in assets, the 10 funds will see the changes take effect on August 1, 2022.
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The biggest fund affected by the expense cut is the SPDR Portfolio S&P 500 ETF (SPLG), which currently manages approximately $20 billion in assets.
SPDR ETF Expense Cuts
| Fund Ticker | Category | Previous Total Expense Ratio | New TER |
|---|---|---|---|
| SPLG | S&P 500 | 0.03% | 0.02% |
| SPMD | S&P 400 mid cap | 0.05% | 0.03% |
| SPSM | S&P 600 small cap | 0.05% | 0.03% |
| SPDW | Developed world ex-US | 0.04% | 0.03% |
| SPEU | Europe | 0.09% | 0.07% |
| SPEM | Emerging markets | 0.11% | 0.07% |
| SPTS | Short-term Treasury | 0.06% | 0.03% |
| SPTI | Intermediate-term Treasury | 0.06% | 0.03% |
| SPTL | Long-term Treasury | 0.06% | 0.03% |
| SPHY | High-yield Bond | 0.10% | 0.05% |
Source: State Street Global Advisors
“We consistently review the fees, and as funds grow, it allows us to reduce the total expense ratio. This lineup has been very successful for us,” said Sue Thompson, head of SPDR Americas distribution at State Street Global Advisors.
Thompson mentioned that the ETF suite is designed for smaller investors focused on long-term ownership. These funds have lower per-share prices compared to similar funds like the SPDR S&P 500 Trust (SPY), making it easier for investors to build a full portfolio while buying full shares of the funds.
The SPY, primarily used as a trading vehicle by institutional investors, has an expense ratio of 0.0945% and trades around $450 per share. On the other hand, the SPLG will now have an expense ratio of just 0.02% and a per-share price close to $50.
Fund costs have been declining for asset managers in recent years, especially as the ETF industry grows and attracts assets from higher-cost mutual funds. Some firms even offer products with zero expense ratios, such as the BNY Mellon Large Cap Core Equity ETF (BKLC).
Thompson stated that the SPDR fund expenses are not expected to reach zero due to the necessary costs involved in managing these funds. However, the company plans to continue sharing the savings from the scale of its products with customers.
“When you compare the expense ratios from 15 years ago to today, it’s
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Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
