Initiative urges investors to look at all aspects of total
cost of ownership, where liquidity is an important
consideration
State Street Global Advisors, the asset management business of
State Street Corporation (NYSE: STT) and creator of the world’s
first ETFs,1 today launched a new initiative aimed at educating
investors about the importance of ETF liquidity. The integrated
program, which will include thought leadership, social media
promotion and advertising, launched across the US today and is
expected to run through the fourth quarter.
“We want investors to understand that liquidity attributes can
have a significant impact on the total cost of ownership, even
though expense ratio is frequently emphasized,” said Sue Thompson,
head of SPDR® Americas Distribution for State Street Global
Advisors.
The first phase of the initiative called “It’s Liquidity Time”
will focus on generating greater awareness of the importance of
liquidity and the impact it can have on trading costs.
“As a leader in ETF liquidity, our strategy is to help investors
make more informed investment decisions based on our deep
expertise,” said Stephen Tisdalle, chief marketing officer of State
Street Global Advisors. “This initiative will educate investors on
how their actual portfolio costs can shift during periods of
volatility and feature the ways investors are incorporating
liquidity analysis into their strategies.”
State Street Global Advisors’ SPDR family of ETFs, like the SPDR
S&P 500® ETF (SPY) and the SPDR Dow Jones® Industrial Average
ETF (DIA), are among the most liquid in the industry comprising
nearly half of all US-listed ETF trading volume2 and include 7 out
of the 10 most liquid ETFs invested in US equities.3
Liquidity’s impact on total ETF costs
“Depending on your rebalancing frequency, trading costs can
significantly accumulate and have a larger impact on the total cost
of ownership than any expense ratio difference between two ETFs.
This underscores why liquidity analysis has to be a part of any due
diligence process prior to implementation,” said Matthew Bartolini,
CFA, head of SPDR Americas Research for State Street Global
Advisors.
As an example, for sector rotation strategies with a monthly
rebalance, the liquidity profile of the sector ETF used can
dramatically affect the total cost of the strategy over a one-year
period. The table below illustrates how an ETF with a higher
expense ratio can be the more cost effective option after
accounting for trading costs. The less liquid, lower fee fund
actually ends up being 73 percent more expensive than the more
liquid, higher expense ratio sector ETF after a full year.
ETF Type Average Gross Expense Ratio %
Average Bid/Ask Spread % Trading costs for two
trades a month Total Cost Average over One Year
More liquid 0.13 0.02 0.04 0.59 Less
liquid 0.10 0.04 0.08 1.02
Source: Bloomberg Finance, L.P., SPDR Americas Research, as of
March 31, 2019. For illustrative purposes only. The information
above does not reflect individual purchases and sales of funds.
For more information on the different use cases that are
additive to an ETF’s liquidity profile, including options and
short-selling, please visit spdrs.com/liquidity. State Street
Global Advisors is uniquely adept at understanding liquidity given
SPDR ETFs make up nearly half of all US-listed ETF trading volume,
have the most options open interest, and are the most heavily
shorted suite.4
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 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 four decades, State Street Global Advisors has served the
world’s governments, institutions and financial advisors. With a
rigorous, risk-aware approach built on research, analysis and
market-tested experience, we build from a breadth of active and
index strategies to create cost-effective solutions. As stewards,
we help portfolio companies see that what is fair for people and
sustainable for the planet can deliver long-term performance. And,
as pioneers in index, ETF, and ESG investing, we are always
inventing new ways to invest. As a result, we have become the
world’s third largest asset manager with nearly US $2.80 trillion*
under our care.
* This figure is presented as of March 31, 2019 and includes
approximately $33 billion of assets with respect to SPDR products
for which State Street Global Advisors Funds Distributors, LLC
(SSGA FD) acts solely as the marketing agent. SSGA FD and State
Street Global Advisors are affiliated.
Important Risk Information:
THIS PRESS RELEASE IS INTENDED FOR U.S. INVESTORS
ONLY
Investing involves risk, including the risk of loss of
principal.
Equity securities may fluctuate in value in response to the
activities of individual companies and general market and economic
conditions.
While the shares of ETFs are tradable on secondary markets, they
may not readily trade in all market conditions and may trade at
significant discounts in periods of market stress.
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.
State Street Global Advisors and its affiliates (“SSGA”) have
not taken into consideration the circumstances of any particular
investor in producing this material and are not making an
investment recommendation or acting in fiduciary capacity in
connection with the provision of the information contained
herein.
Standard & Poor’s, S&P and SPDR are registered
trademarks of Standard & Poor’s Financial Services LLC, a
division of S&P Global (“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 Advisors Funds
Distributors, LLC, member FINRA, SIPC. ALPS Distributors, Inc.,
member FINRA, is the distributor for SPY and DIA, all unit
investment trusts. ALPS Distributors, Inc. is not affiliated with
State Street Global Advisors Funds Distributors, LLC.
Before investing, consider the fund’s investment objectives,
risks, charges and expenses. To obtain a prospectus or summary
prospectus which contains this and other information, call
866.787.2257 or visit spdrs.com. Read it carefully.
The whole or any part of this work may not be reproduced, copied
or transmitted or any of its contents disclosed to third parties
without SSGA’s express written consent.
© 2019 State Street Corporation - All Rights Reserved
Not FDIC Insured • No Bank Guarantee • May Lose Value
2519497.1.1.AM.RTL
SPD001863
Expiration date: 4/30/2020
1 ETFs managed by State Street Global Advisors have the oldest
inception dates within the US, Hong Kong, Australia and Singapore
(State Street Global Advisors launched the first ETF in the US on
January 22, 1993, launched the first ETF in Hong Kong on November
11, 1999, launched the first ETF in Australia on August 24, 2001,
and launched the first ETF in Singapore on April 11, 2002).2
Bloomberg Finance LP, as of 03/8/2019. Based on 180 day dollar
trading volume. Past performance is not a guarantee of future
results.3 Bloomberg Finance LP, as of 03/8/2019. Based on 180 day
dollar trading volume and geography focus of US Equities. Past
performance is not a guarantee of future results.4 Bloomberg
Finance LP, as of 03/8/2019 based upon the open interest notional
amounts of all options contracts tied to ETFs, grouped by ETF
issuer.
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version on businesswire.com: https://www.businesswire.com/news/home/20190429005449/en/
Olivia Offner+1 617-662-0198ooffner@statestreet.com
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