Exchange traded fund (ETF) industry assets in the United States
decreased 0.4 percent during the first half of 2010, as investors
held $772 billion in 897 ETFs as of June 30, 2010, according to
State Street Global Advisors (SSgA), the investment management
business of State Street Corporation (NYSE: STT). During the same
period, equity markets, as measured by the widely followed S&P
500 Index fell, 8.9 percent.
“Despite the market’s performance during the first half of 2010,
ETF net inflows are ahead of last year’s pace,” said Tom Anderson,
director of strategy and research for the Intermediary Business
Group at State Street Global Advisors. “This growth has been driven
by financial professionals, individual investors and institutions,
and underscores the way investors build and maintain portfolios in
every market cycle using these innovative investment products.”
Three key trends helped shape the ETF industry during the first
six months of 2010:
Continued Growth of Fixed Income ETF Assets
The growth of fixed income ETF assets, which increased 78
percent in 2009, remained a key trend during the first half of the
year. Fixed-income ETF assets increased by $21.2 billion or 21
percent in the six months to June 30, 2010, as the number of bond
ETFs available to investors reached 105. This growth illustrates
the rapid evolution in the ETF industry in order to meet the needs
of investors. In 2006, just six fixed income ETFs existed,
representing approximately $20 billion in assets. In the first half
of 2010, six of the 10 ETFs with the highest net cash flows were
bond ETFs.
The growth in bond ETFs was broad based — every category, from
corporate bonds to municipal bonds to Treasury Inflation Protected
Securities (TIPs) and US Treasuries, saw positive cash flows
year-to-date. The most popular fixed-income asset classes included
short-term bond and US Treasury ETFs, which attracted more than $7
billion and $5 billion in net cash flows, respectively.
Gold ETF Assets Reach New High
Amid concerns about the European debt crisis and the pace of
economic recovery in the US, investors continued their search for
non-correlated returns, as assets in gold ETFs increased by 30.2
percent during the first half of the year. SPDR Gold Shares (GLD)
currently leads all exchange traded funds in net cash flows,
attracting more than $7.6 billion during the first half of the
year, as GLD’s total assets surpassed $50 billion in the second
quarter — a milestone that reflects both the increased acceptance
and application of gold ETFs as a means of gaining exposure to this
asset class.
“Flash Crash” Does Not Shake Investor Confidence in
ETFs
With ETFs accounting for more than 60 percent of all cancelled
trades during the market disruption that occurred between 2:40 p.m.
and 3:00 p.m. on May 6, 2010, several third parties questioned
their role in the market turmoil. Preliminary findings, which are
consistent with internal reviews, indicate that the events of May 6
were the result of market structural issues, including the lack of
published, uniform standards on erroneous trades, market circuit
breakers and speed bumps, and were not caused or exacerbated by
ETFs or ETF trading. Investor confidence in ETFs in the weeks that
followed the “flash crash” remained strong, as net new inflows into
ETFs totaled $20.2 billion in May and June.
About State Street Global Advisors
State Street Global Advisors (SSgA) is a global leader in asset
management that sophisticated investors worldwide rely on for a
disciplined investment process, powerful global investment platform
and access to every major asset class, capitalization range and
style. SSgA is the asset management business of State Street, one
of the world’s leading providers of financial services to
institutional investors.
About State Street
State Street Corporation (NYSE: STT) is the world's leading
provider of financial services to institutional investors including
investment servicing, investment management and investment research
and trading. With $19 trillion in assets under custody and
administration and $1.8 trillion in assets under management at June
30, 2010, State Street operates in 25 countries and more than 100
geographic markets worldwide. For more information, visit State
Street’s web site at www.statestreet.com.
ETFs trade like stocks, are subject to investment risk,
fluctuate in market value and may trade at prices above or below
the ETFs net asset value. Brokerage commissions and ETF expenses
will reduce returns.
Bond funds contain interest rate risk (as interest rates rise
bond prices usually fall); the risk of issuer default; issuer
credit risk; liquidity risk; and inflation risk.
Shares (the “Shares”) of the SPDR® Gold Trust (the “Trust”)
trade like stocks, are subject to investment risk and will
fluctuate in market value. The value of the Shares relates directly
to the value of the gold held by the Trust (less Trust expenses)
and fluctuations in the price of gold could materially adversely
affect an investment in the Shares. The Trust does not generate any
income and as the Trust regularly sells gold to pay for its ongoing
expenses, the amount of gold represented by each Share will decline
over time. Investors should be aware that there is no assurance
that gold will maintain its long-term value in terms of purchasing
power in the future. In the event that the price of gold declines,
the Sponsor (defined below) and the Marketing Agent (defined below)
expect the value of an investment in the Shares to similarly
decline proportionately.
The Trust has filed a registration statement (including a
prospectus) with the SEC for the offering to which this
communication relates. Before you invest, you should read the
prospectus in that registration statement and other documents the
Trust has filed with the SEC for more complete information about
the Trust and this offering. You may get these documents for free
by visiting EDGAR on the SEC website at www.sec.gov. Alternatively,
the Trust or any Authorized Participant will arrange to send you
the prospectus if you request it by calling 1-866-320-4053 or
contacting State Street Global Markets, LLC, One Lincoln Street,
Attn: SPDR Gold Shares, 30th Floor, Boston, MA 02111.
The prospectus contains material information about the Trust and
its Shares which is material and/or which may be important to you.
You should read the entire prospectus, including “Risk Factors”
before making an investment decision about the Shares.
Shareholders of the Trust will not have the protections
associated with ownership of shares in an investment company
registered under the Investment Company Act of 1940 or the
protections afforded by the Commodity Exchange Act of 1936. The
Trust is not registered as an investment company under the
Investment Company Act of 1940 and is not required to register
under such act. Neither the Sponsor nor the Trustee of the Trust is
subject to regulation by the Commodity Futures Trading Commission.
Shareholders will not have the regulatory protections provided to
investors in Commodity Exchange Act regulated instruments or
commodity pools.
“SPDR” is a trademark of the Standard & Poor’s Financial
Services, LLC and has been licensed by use for the Sponsor.The
“SPDR” trademark is used under license from Standard & Poor’s
Financial Services, LLC (“S&P”) and the SPDR® Gold Trust is
permitted to use the “SPDR” trademark pursuant to a sublicense from
the Marketing Agent. No financial product offered by SPDR® Gold
Trust, or its affiliates, is sponsored, endorsed, sold or promoted
by S&P. S&P makes no representation or warranty, express or
implied, to the owners of any financial product or any member of
the public regarding the advisability of investing in securities
generally or in financial products particularly or the ability of
the index on which the financial products are based to track
general stock market performance. S&P is not responsible for
and has not participated in any determination or calculation made
with respect to issuance or redemption of financial products.
S&P has no obligation or liability in connection with the
administration, marketing or trading of financial products.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
The Trust is sponsored by World Gold Trust Services, LLC (the
“Sponsor”), a wholly-owned subsidiary of the World Gold Council.
State Street Global Markets, LLC (the “Marketing Agent”) is the
marketing agent of the Trust and an affiliate of State Street
Global Advisors. For more information: State Street Global Markets,
LLC, One Lincoln Street, Boston, MA, 02111• 866.320.4053 •
www.spdrgoldshares.com.
Not FDIC Insured – No Bank Guarantee – May Lose Value
CORP-0151
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