From the outside, it would appear State Street’s (NYSE: STT) State Street Global Advisors, the second-largest U.S. ETF issuer, has its hands full.
One of the firm’s marquee products, the SPDR Gold Shares (NYSEArca: GLD), has lost $22.2 billion in assets this year, nearly three times that of the second-worst ETF outflow offender. Then there is the rising competition among providers of sector ETFs.
SSgA was one of the first issuers to offer sector ETF with its nine sector SPDRs, all of which have annual expense ratios of 0.18%. Vanguard, the third-largest U.S. ETF issuer, came along with comparable products, most of which now charge 0.14% per year. SSgA’s Boston neighbor Fidelity has undercut both SSgA and Vanguard with the recent introduction of 10 sector funds with annual fees of 0.12%. [Sector ETF Slideshow]
And then there is the ongoing chatter that Vanguard will surpass SSgA for the second spot among U.S. ETF issuers. That conversation is now multiple years old and SSgA still has $46.2 billion more in ETF assets than does Vanguard. Based on the current market value, nearly two Twitters (NYSE: TWTR) separate SSgA’s and Vanguard’s ETF AUM totals.
Writing SSgA’s sector ETF obituary is hasty. More importantly, the statistics indicate the firm is still the dominant provider of sector ETFs and that business is growing.
“Over the past three years, we’ve seen a 30% compound annual growth rate in the nine sector SPDRs,” said Dave Mazza, SSgA’s head of ETF investment strategy, in an interview with ETF Trends at the Bank of New York Mellon ETF Symposium in Dana Point, Calif.
While Mazza acknowledged the increased competition in the sector ETF arena, he said the nine SPDRs “have a lot of momentum” and that the firm is seeing increased institutional use of the SPDRs lineup.