State Street Takes Quality Approach to Country ETFs
June 12th, 2014 at 1:51pm by Tom Lydon
Fresh off last week’s launch of three exchange traded emphasizing multi-factor, State Street’s (NYSEArca: STT) State Street Global Advisors unit, the second-largest U.S. ETF issuer, has taken the quality approach to the single-country level with the debut of six new ETFs today.
As is the case with the three diversified quality ETFs launched by SSgA last week, all six of the country-specific offerings that debuted today track MSCI indices. The quality factor “captures excess returns to stocks that are characterized by low debt, stable earnings growth and other ‘quality’ metrics,” according to MSCI.
Although Spain is not the largest economy tracked by the six new SSgA ETFs, arguably one of the suite’s more interesting constituents is the SPDR MSCI Spain Quality Mix ETF (NYSEArca: QESP). QESP is just the second Spain ETF to list in the U.S. and will compete with the iShares MSCI Spain Capped ETF (NYSEArca: EWP).
QESP’s timing could prove fortunate as EWP is up 16% this year and Spanish 10-year bonds now sport yields on par with their U.S. equivalents. [PIIGS ETFs Gain Cash]
Investors now have another Australia ETF to choose from in the form of the SPDR MSCI Australia Quality Mix ETF (NYSEArca: QAUS). As is the case with QESP, the new Spain ETF, QAUS could be the beneficiary of some good timing as Australian equities, though richly valued, have been among the strongest performers in the developed world this year. [Australia ETFs Continue to Impress]
The SPDR MSCI Germany Quality Mix ETF (NYSEArca: QDEU) is the eighth Germany-specific ETF to list in the U.S. Top holdings in that ETF’s underlying index include BASF, Siemens (NYSE: SIE) and SAP (NYSE: SAP).
The SPDR MSCI United Kingdom Quality Mix ETF (NYSEArca: QGBR) becomes the sixth U.K. ETF in the U.S. That new fund is home to familiar names such as AstraZeneca (NYSE: AZN), Royal Dutch Shell (NYSE: RDS-A) and BP (NYSE: BP).
The SPDR MSCI Canada Quality Mix ETF (NYSEArca: QCAN) and the SPDR MSCI Japan Quality Mix ETF (NYSEArca: QJPN) are the other members of SSgA’s single-country quality ETF suite. All six of the new funds have annual expense ratios of 0.6% per year.
SSgA’s ETFs that debuted last week that benchmark to MSCI indices are multi-factor funds that can select components based on a single factor, like volatility or dividends. Additionally, the indices can select holdings based on multiple factors through a combination of book value, quality and momentum. [State Street, MSCI Partner on Multi-Factor ETFs]
ETF Trends editorial team contributed to this post.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.