State Street Global Advisors’ strategy to lower the expense ratio of 15 existing ETFs with established AUM has paid off handsomely.
Since debuting just four months ago, its ultra-low-cost SPDR Portfolio suite has already attracted over $10 billion in inflows, as investors continue to gravitate towards the lowest cost ETFs.
The milestone was passed on Friday, Feb. 16.
Matthew Bartolini, Head of SPDR Americas Research at State Street Global Advisors, told ETF Trends that before the restructuring, only three of the 15 funds had over $1 billion AUM.
Now nine of the ultra-low-cost funds are in the $1 billion club.
“Clients can construct portfolios with confidence – trading costs are really important,” Bartolini said. “When new products are launched, even if they are low fee, you have a hard time garnering assets and trading liquidity.”
When SSGA did the restructuring, Bartolini said they knew it wasn’t enough to just be the lowest cost exposure in a category, but the funds also needed existing assets, established liquidity and track records.
As far as the top performers in the restructured suite, Bartolini said investors had been favoring international plays.
For example, the SPDR Portfolio Developed World ex-US ETF (SPDW) added $1.4 billion in assets since the funds were restructured.
On the U.S. equities side, the SPDR Portfolio Total Stock Market ETF (SPTM) has witnessed 175% growth in AUM.
“It started at $520 million in assets – it’s taken in $900 million in assets – it’s up to $1.4 billion,” Bartolini said. “The fund with the biggest growth, which points to more usage in portfolios – is SPDR Portfolio Large Cap ETF (SPLG). It had $155 million in assets when we restructured. Now it has $1 billion. Those assets grew by 580% since we restructured the funds.”
The Portfolio ETFs are among the cheapest ETF options on the market, contending with other low-cost players like Charles Schwab, BlackRock’s iShares and Vanguard. To put ETF costs in perspective, there are 2,029 U.S.-listed ETFs on the market with an average expense ratio of 0.58%.
The group of 15 SPDR “Portfolio” ETFs expense ratio ranges from 0.03% to 0.11%.
For more information, visit https://us.spdrs.com/en/strategies/spdr-portfolio-low-cost-etfs.