According to a survey of 419 financial advisors and wealth
managers conducted by State Street Global Advisors (SSGA), the
asset management business of State Street Corporation (NYSE:STT),
the vast majority of investment professionals (85 percent) are
using exchange traded funds (ETFs) to gain exposure to individual
sectors or industries. More than one-quarter of survey respondents
(26 percent) report that over 20 percent of their assets under
management are allocated to sector/industry ETFs.
Advisors’ top reasons for incorporating sector and industry ETFs
into client portfolios include:
- Portfolio Diversification (cited by 66%
of respondents)
- Expressing Tactical Views (65%)
- Obtaining Alpha (49%)
- Managing Risk in the Equity Market
(42%)
“The lower for longer return environment has many investment
professionals taking a more precise approach to asset allocation,
which favors sectors and industries over style-based investing,”
said Nick Good, co-head of the Global SPDR business at State Street
Global Advisors. “From 2000 to 2015, the average yearly difference
between large cap growth and value is under 8 percent while the
average difference between the best-and worst-performing sectors is
36 percent. Given this divergence, advisors are increasingly
relying on sector and industry strategies to meet the needs of
their clients.”
Across all types of investment professionals, the use of sector
and industry ETFs is most prevalent by private wealth managers,
with 92 percent reporting they had some exposure to the sector
and/or industry funds; followed by Independent/Regional Broker
Dealer advisors (87 percent), National Broker Dealer advisors (86
percent) and Registered Investment Advisors (80 percent). The most
important variables these investment professionals consider when
choosing a specific sector or industry ETF are liquidity, expense
ratio and the fund’s holdings.
Looking ahead, 95 percent of financial advisors surveyed report
they plan to increase (45 percent) or maintain (50 percent) their
use of sector and industry ETFs in the future.
“Advisors’ use of sector and industry ETFs has come a long way
since the launch of the first sector SPDR ETFs in 1998,” said Dave
Mazza, head of ETF and Mutual Fund Research at SSGA. “With
increasing volatility and uneven market performance intensifying
the search for superior, risk-adjusted returns, demand for sector
and industry ETFs will remain a core pillar in the industry’s
growth and development.”
For more information on how investment professionals are using
sector and industry ETFs, click here to download a copy of The
Rising Tide of Sector & Industry Investing.
About the Survey
This research is based on State Street Global Advisors’ Survey
of Investment Professionals’ Sector and Industry Investing
Attitudes and Usage, completed in the first quarter of 2016. The
study comprised web-based interviews with 419 financial advisors
and wealth managers.
About SPDR Exchange Traded Funds
SPDR ETFs are a comprehensive family spanning an array of
international and domestic asset classes. SPDR ETFs are managed by
SSGA Funds Management, Inc., a registered investment adviser and
wholly owned subsidiary of State Street Corporation. The funds
provide investors with the flexibility to select investments that
are precisely aligned to their investment strategy. Recognized as
an industry pioneer, State Street created the first US listed ETF
in 1993 (SPDR S&P 500® – Ticker SPY) and has remained on the
forefront of responsible innovation, as evidenced by the
introduction of many ground-breaking products, including
first-to-market launches with gold, international real estate,
international fixed income, and sector ETFs. For more information,
visit www.spdrs.com.
About State Street Global Advisors
For nearly four decades, State Street Global Advisors has been
committed to helping financial professionals and those who rely on
them achieve their investment objectives. We partner with
institutions and financial professionals to help them reach their
goals through a rigorous, research-driven process spanning both
active and index disciplines. We take pride in working closely with
our clients to develop precise investment strategies, including our
pioneering family of SPDR ETFs. With trillions* in assets under
management, our scale and global footprint provide unrivaled access
to markets and asset classes, and allow us to deliver expert
insights and investment solutions.
State Street Global Advisors is the investment management arm of
State Street Corporation.
* Assets under management were $2 trillion as of September 30,
2016. AUM reflects approximately $40 billion (as of September 30,
2016) with respect to which State Street Global Markets, LLC (SSGM)
serves as marketing agent; SSGM and State Street Global Advisors
are affiliated.
Important Information
Investing involves risk including the risk of loss of
principal.
ETFs trade like stocks, are subject to investment risk,
fluctuate in market value and may trade at prices above or below
the ETF's net asset value. Brokerage commissions will reduce
returns. Index-based ETFs are passively managed and seek to track
an index of securities. Expenses may cause the ETF's returns to
deviate from the returns of the index.
Diversification does not ensure a profit or guarantee against
loss.
Equity securities may fluctuate in value in response to the
activities of individual companies and general market and economic
conditions.
Standard & Poor’s, S&P and SPDR are registered
trademarks of Standard & Poor’s Financial Services LLC
(S&P); Dow Jones is a registered trademark of Dow Jones
Trademark Holdings LLC (Dow Jones); and these trademarks have been
licensed for use by S&P Dow Jones Indices LLC (SPDJI) and
sublicensed for certain purposes by State Street Corporation. State
Street Corporation’s financial products are not sponsored,
endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their
respective affiliates and third party licensors and none of such
parties make any representation regarding the advisability of
investing in such product(s) nor do they have any liability in
relation thereto, including for any errors, omissions, or
interruptions of any index.
Distributor: State Street Global Markets, LLC, member FINRA,
SIPC, a wholly owned subsidiary of State Street Corporation.
References to State Street may include State Street Corporation and
its affiliates. Certain State Street affiliates provide services
and receive fees from the SPDR ETFs.
ALPS Distributors, Inc., a registered broker-dealer, is
distributor for SPDR® S&P® 500, SPDR® S&P® MidCap 400 and
SPDR® Dow Jones Industrial Average, and all unit investment trusts.
ALPS Portfolio Solutions Distributor, Inc. is distributor for
Select Sector SPDRs. ALPS Distributors, Inc. and ALPS Portfolio
Solutions Distributor, Inc. are not affiliated with State Street
Global Markets, LLC.
ALPS Portfolio Solutions Distributor, Inc. is distributor for
Select Sector SPDRs. ALPS Portfolio Solutions Distributor, Inc. is
not affiliated with State Street Global Markets, LLC.
Before investing, consider the funds’ investment objectives,
risks, charges and expenses. To obtain a prospectus or summary
prospectus which contains this and other information, call
1-866-787-2257 or visit www.spdrs.com. Read it
carefully.
State Street Corporation, One Lincoln Street, Boston, MA
02111-2900
© 2016 State Street Corporation - All Rights Reserved
Not FDIC Insured • No Bank Guarantee • May Lose Value
CORP-2320
10/31/17
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version on businesswire.com: http://www.businesswire.com/news/home/20161101006007/en/
State Street CorporationAndrew Hopkins, +1
617-664-2422Ahopkins2@StateStreet.com
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