A Sector Investing Perspective on SPDR ETF, Select Sector SPDR ETF, and SPDR Gold Shares
State Street is involved in the management and marketing of several exchange-traded funds (ETFs) through its subsidiary, State Street Global Advisors (SSgA).
Sector ETFs, industry-group ETFs, and a commodity trust are offered.
Breadth of Sector ETFs
Ten sector ETFs are offered, nine under the Select Sector SPDR series. Fourteen industry-group ETFs are available, eight under the SPDR S&P series and four under the KBW series. SPDR Gold Shares is the sole commodity trust.
Investment Approach
The State Street ETFs and the SPDR Gold commodity trust take an indexed or 'passive' approach to investing. The benchmark index used depends on the type of exchange traded entity.
Select Sector SPDR
The Select Sector SPDRs are ETFs that result from the division of the Standard & Poor's 500 index into nine sector
indexes. All stocks within each sector are allocated to the corresponding Select Sector SPDR ETF.
Each Select Sector SPDR ETF is designed to track
the total return performance of the corresponding S&P Select Sector index.
SPDR S&P ETF
The eight industry-group SPDR S&P ETFs are designed to track the total return performance of the corresponding S&P Select Industry
Index. Each S&P Select Industry Index represents the industry's portion of the S&P Total Market Index. The S&P Total Market Index includes companies
of all market capitalizations.
Other ETFs
State Street offers ETFs in the financial and technology sectors that use benchmarks developed by Keefe, Bruyette, & Woods (KBW),
Dow Jones & Co., and Morgan Stanley.
SPDR Gold Shares
SPDR Gold Shares represent units of fractional undivided beneficial ownership of the SPDR Gold Trust.
The London PM fix for gold is used as the basis for determining the net asset value of the SPDR Gold Shares.
Expense Ratio
The State Street exchange traded entities have expense ratios ranging up to 0.6%. The Select Sector SPDR ETFs typically have an expense ratio of 0.24% while the SPDR S&P and KBW industry-group ETFs typically have a 0.35% expense ratio. The SPDR Gold Trust's expense ratio is 0.4%.
Trading Size
The State Street exchange traded entities may be purchased in 'round lots' of 100 shares or smaller with the minimum number being one share.
AlphaProfit Take
Exchange-traded funds and commodity trust managed or marketed by entities of State Street Bank, the largest custodian and investment manager of institutional assets worldwide, have carved out a major share for themselves. As evident from the trading volumes, the Select Sector SPDR ETFs launched in late 1998 are popular with sectors investors. Comprising of S&P 500 member companies, the Select SPDR ETFs have low expense ratios and are a suitable option for investors seeking exposure to broad sectors.
Launched in late 2004, the SPDR Gold Shares are a hit with investors. This exchange traded commodity trust allows investors to profit from changes in the price of gold without venturing into the spot or futures markets.
State Street entities have also introduced a limited number of industry-group ETFs under the SPDR S&P and the KBW series. Like Select Sector SPDR ETFs, the SPDR S&P ETFs and the KBW ETFs tend to have relatively low expense ratios. The popularity of the industry group ETFs is likely to grow over time.
AlphaProfit Newsletter and SPDR ETF Recommendations
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The above content is for informational purposes only. AlphaProfit Investments, LLC neither is associated with nor receives any compensation from any of the
entities connected with the ETFs mentioned herein. State Street Global Advisors (SSgA), the investment management arm of State Street, is the investment
manager for the Select Sector SPDR ETFs. ALPS Distributors, Inc. is the distributor for the Select Sector SPDR ETFs. SSgA Funds Management, Inc. is the
investment manager for the SPDR S&P ETFs. SSgA Funds Management, Inc. is a part of State Street Global Advisors. State Street Global Markets, LLC, an
affiliate of State Street Global Advisors is the distributor for the SPDR S&P ETFs. The SPDR Gold Trust issues SPDR Gold Shares.
State Street Global Markets, LLC, markets the SPDR Gold Trust. streetTRACKS is the registered service mark of State Street Corporation.
