The CEO noted State Street’s ETF inflows have been driven by positioning in the “commoditized end of the ETF space” such as SPDR S&P 500 (NYSEArca: SPY).
“So, we think the strategy should be to compete in the commoditized area. And in the newer area, which tend to have higher revenues, more innovation, that’s where we’re putting a lot of our focus from a standpoint of investment,” Hooley said.
The so-called fee war in ETFs has been centered in “core” funds that track large chunks of the equity and bond markets. In these ETFs, fees are usually the most important factor for buy and hold investors and advisors when selecting individual funds.
For example, this week BlackRock created the new iShares Core Series targeting long-term investors. The move allows BlackRock to cut fees at its core ETFs while keeping expense ratios at more specialized funds unchanged.
Full disclosure: Tom Lydon’s clients own SPY.