Tag Archives: State Street Global Advisors

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Buy-Side Beefs Up Use of ETF Products; They Finally Get The Joke

ETF product use among the Buy-Side is no longer viewed as “just a portfolio re-balance or transition management tool,”  according to a survey of the investment industry’s largest portfolio managers. More PMs than ever are finally ‘getting the joke’ with regard to the value proposition of Exchange-Traded Funds (ETFs), according to a recent report by State Street Global. The up-trending holdings of ETF products across the institutional manager community is attributed to a variety of reasons that include better product education, the ongoing search for alpha, the need to reduce single-stock exposure, and according to Europe-based fund managers, ETF products are ideal vehicles to express global macro investment views.

According to recent research from State Street Global, 85% of investment professionals are using exchange-traded funds (ETFs) to gain exposure to individual sectors or industries. More than one-quarter of survey respondents (26%) report that over 20% of their assets under management are allocated to sector/industry ETFs.

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.

While it is hard to compare the two conventionally – the average daily amount of stock trading as measured by Bats Global runs around 7.30 billion shares compared to 1.3 billion for ETFs, the latter reported by SSGA. When compared on a notional dollar basis, ETFs hit $13.1 billion versus $48.5 billion for stocks.

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The estimated value of all ETF shares issued exceeded that of shares redeemed by $5.60 billion for the week ended October 26, 2016, the Investment Company Institute recently reported. For ETFs backed by equities, for the week ended November 1 net issuance hit $5.23 billion for the week, compared to estimated net issuance of $2.38 billion in the previous week. Domestic equity ETFs had estimated net issuance of $4.03 billion, and world equity ETFs had estimated net issuance of $1.19 billion.

Nick Good, co-head of the Global SPDR business at State Street Global Advisors, told Markets Media that the research pointed a rosy picture for ETFs going forward. He said the survey found that the use of sector and industry ETFs is highest among 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,” he said.

Looking ahead, 45 percent of financial advisors surveyed report they plan to increase usage of ETFs while another 50 percent said they plan to maintain their current allocation of sector and industry ETFs in the future.

Advisors’ top reasons for incorporating sector and industry ETFs into client portfolios include:

Continue reading

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ETF Fees-BlackRock Leads Race To Zero

Unless you are Rip Van Winkle, you don’t need to be a MarketsMuse to know that the primary value proposition put forth by the ETF industry has always been: “Lower Fees Vs. Mutual Funds!” Yes, the secondary ‘advantage’ is “liquidity,” given that investors can move in and out of exchange-traded-funds throughout the trading day, whereas mutual funds are priced on an end-of day basis.

Well, Issuers of exchange-traded funds are now eating their own lunches, as competing Issuers are now pursuing a “race-to-zero” path when it comes to administration fees—adding a further crimp to the mutual fund industry’s marketing complex—which is being rocked by allegations from PIMCO’s former top honcho Bill Gross who has alleged in a recent lawsuit that PIMCO’s administrative fees are equal to the management fees the firm charges (but, that’s another story!)

Courtesy of today’s column by WSJ’s Daisy Maxey ETF Fees: “The Arms Race to Nothing”, the story at hand is worth two in the bush…here’s an excerpt:

 

Daisy Maxey, WSJ
Daisy Maxey, WSJ

BlackRock Inc. exchange-traded fund can now claim the title of the lowest-cost stock exchange-traded fund—but it probably won’t have that distinction to itself for long.

BlackRock, the largest global provider of ETFs, on Tuesday cut fees on seven of its iShares Core ETFs. That included trimming the annual expenses of the $2.7 billion iShares Core S&P Total U.S. Stock Market ETF to 0.03% of assets from 0.07%, bumping a pair of Charles Schwab Corp. ETFs from the lowest-cost spot.

Within hours, Schwab vowed to match the cut on its $4.9 billion Schwab U.S. Large-Cap ETF, which currently has expenses of 0.04%.

“Our intention has always been to be the price leader in the ETF space, and we’re going to maintain that,” said a spokesman for Schwab, who didn’t give an exact time frame for the company’s planned move.

Low fees have been one of the big attractions of ETFs and providers have competed fiercely to whittle down their charges by additional hundredths of a percentage point. The latest cuts by BlackRock are being viewed as a challenge to Vanguard Group, the No. 2 in ETF assets, as well as a sign of the success of BlackRock’s iShares Core ETF lineup, launched three years ago.

The giants of the ETF business are BlackRock, with $818 billion in U.S. ETF assets under management; Vanguard, at $479 billion; and State Street Global Advisors, the asset-management business of State Street Corp. , at $418 billion, according to Thomson Reuters Lipper. Schwab is a distant No. 7, with $38 billion in U.S. ETF assets, according to Thomson Reuters Lipper.

BlackRock’s iShares Core ETFs, which now number 20, are marketed as simple and low-cost portfolio building blocks.

The lineup has grown to $160 billion in assets as of Sept. 30, according to BlackRock.

For the full story from WSJ, click here

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Following Slashing ETF Prices, State Street To Shutdown Three ETFs

MarketMuse update profiles the the second oldest financial institution in the United States, State Street’s plans to shut down three ETFs after what has been a very difficult year for them. The shutdowns are due to what they call “limited market demand”. With more of an update, an excerpt from InvestmentNews’ Trevor Hunnicutt’s story, “State Street to close three ETFs that attracted little investor interest” from 10 March , is below. 

The announced closure of the ETFs, including one municipal-bond fund in partnership with Nuveen Investments Inc., comes five weeks after the ETF pioneer slashed prices on nearly a third of its funds and while the firm faces outflows in its flagship fund.

State Street, who manages the first-to-market “SPDR” ETFs, will shut its S&P Mortgage Finance ETF (KME), S&P Small Cap Emerging Asia Pacific ETF (GMFS) and SPDR Nuveen S&P VRDO Municipal Bond ETF (VRD), according to a statement Monday. The funds are each at least three years old, but none hold more than $6 million in assets.

State Street, whose money managing arm is also known as SSGA, has $441 billion in U.S. ETF assets, third behind BlackRock Inc.’s iShares and the Vanguard Group Inc. The firm is perhaps best known for its SPDR S&P 500 ETF (SPY), which is commonly recognized as the first ETF traded in the U.S. as well as the most widely traded. That fund has lost $26 billion to investor redemptions this year, according to Morningstar Inc. estimates. State Street, whose index-tracking fund is used widely by tactical traders and institutions along with advisers, has said those flows are cyclical.

Meanwhile, the firm also has tried to expand its lineup to more profitable mutual funds and partnerships on ETFs with Nuveen and DoubleLine Capital’s Jeffrey Gundlach to attract assets into other product lines.

For the entire article from InvestmentNews, click here.

Bond Guru Gundlach Launches Actively-Traded Bond ETF

MarketsMuse update profiling the debut of bond guru and DoubleLine Capital’s founder Jeff Gundlach’s first foray into the ETF space is courtesy of ETF.com.The SPDR DoubleLine Total Return Tactical ETF (TOTL) is launching today (Tuesday, Feb. 24).

The $TOTL exchange-traded fund invests in just about every type of debt security, including investment-grade and junk debt—both sovereign and corporate—from issuers around the globe. The portfolio management team is led by none other than Gundlach himself, and will be advised by State Street, according to the prospectus. TOTL costs a net of 55 basis points in expense ratio, or $55 per $10,000 invested.

Gundlach, founder of Los Angeles-based DoubleLine Capital, is one of the most well-known fixed-income investors in the market today, but until now an absent presence in the quickly growing ETF market.

Partnership With SSgA

Last summer, he joined forces with State Street Global Advisors to bring to market an actively managed bond ETF that would go head-to-head with the Pimco Total Return ETF (BOND | B), which at the time was still managed by Bill Gross. Gross has since left Pimco to join Janus.

Replicating BOND’s success will be no small feat, considering that BOND gathered its first $1 billion in assets in less than three months after launch, and grew to become one of the biggest active bond ETFs in the market. BOND’s success was part Gross himself, part a solid track record of outperformance. TOTL has a powerhouse name behind it, but performance only time will tell.  Continue reading

New Short-Dated Investment Grade Corporate Bond ETF Courtesy of State Street Global Advisors

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Courtesy of ETF Strategy’s Simon Smith, CFA

State Street Global Advisors (SSgA) has expanded its range of short-maturity bond ETFs with the launch of the SPDR Barclays 0–5 Year Sterling Corporate Bond UCITS ETF (SYBQ) on the Deutsche Börse (Xetra).

The fund, which is linked to the Barclays 0-5 Year Sterling Corporate Bond Index, enables investors to participate in the performance of fixed income corporate bonds with a maturity of up to five years.

The index includes only investment-grade bonds, denominated in British pounds, from companies in the industrial, utilities and finance sectors. The index typically has around 220 constituents and is reviewed monthly.

As of 31 January, 2014, major constituents included Rabo Bank, UBS, Merrill Lynch, HSBC, Roche, ING, Vodafone, Anheuser-Busch Inbev and Citigroup. Financials had the largest representation with 51.53%, followed by industrials with 38.62% and utilities with 9.84%.

For the full article from ETF Strategy, please click here.

SSgA Launches World’s 1st Inflated-Linked ETF for EM Bonds

Courtesy of Chris Flood at FT.com

State Street Global Advisors has launched the world’s first exchange traded fund that provides exposure to inflation-linked debt inimages emerging markets, a rapidly growing asset class that is attracting interest from international investors.

The SPDR Barclays EM Inflation-Linked Local Bond Ucits ETF has been listed on the Deutsche Börse, with a further listing on the London Stock Exchange expected shortly. Scott Ebner, global head of product development for SSgA, said the new ETF would provide a simple solution for investors keen to access a previously difficult segment of the fixed income market.

“Investors are increasingly looking for ways to diversify their emerging markets exposure beyond traditional equity allocations and are cognisant of prospective inflationary pressures,”said Mr Ebner. SSgA surveyed 128 pension professionals and asset managers across Europe in March and found that three-quarters expected global inflation to rise over the next three years. Nearly 70per cent said that inflationary pressures would be higher in emerging markets than in the developed world.

Fewer than a fifth (19 per cent) of those surveyed by SSgA said that it was easy to access EM inflation-linked bonds. However, almost half (47 per cent) said that they planned to increase their exposure to emerging market debt over the next three years.

The market for EM inflation-linked debt has grown strongly over the past 10 years. The outstanding total of debt is at almost $600bn, providing sufficient size, depth and liquidity for an index-based investment approach. The new ETF tracks the Barclays EM inflation-linked 20% capped index, which includes inflation-linked sovereign bond issued by Brazil, Mexico, Chile, South Africa, Poland, Turkey, Israel, Korea and Thailand.

BlackRock To Buy Credit Suisse European ETF Business

reuters(Reuters) – BlackRock Inc has won the bidding for Credit Suisse Group AG’s European exchange-traded fund business, according to a source familiar with the situation.

The deal is expected to be announced shortly, said the source, who declined to be identified because the deal is not yet public. The value of the deal could not be determined.

A BlackRock spokeswoman and a Credit Suisse spokeswoman declined to comment.

Credit Suisse put its $17.6 billion ETF unit up for sale in October, sources told Reuters at the time.

In November, Credit Suisse said it was integrating its private banking and asset management divisions into a new wealth management unit.

BlackRock and State Street Global Advisors, the asset management arm of State Street Corp, were among the companies bidding for the business, but State Street dropped out of the bidding in December.

Credit Suisse is the fourth largest ETF provider in Europe, with 58 ETFs and a 5.3 percent market share as of December 31, according to ETFGI, a London-based ETF research firm.

BlackRock is the largest ETF provider in Europe, with more than 42 percent of the $331 billion European ETF market. Its 202 European iShares ETFs had $139.6 billion in assets as of December 31, the research firm said.

Credit Suisse’s ETF business would be the second international ETF business BlackRock has acquired in the past several months.

BlackRock bought Toronto-based Claymore Investments, a Canadian ETF operation, from Guggenheim Partners LLC, in March.

“This acquisition shows BlackRock’s further commitment to being the dominant player in ETFs in every market they are in,” said Dave Nadig, director of research at IndexUniverse LLC, a San Francisco-based firm that tracks ETFs.

In October, BlackRock Chief Executive Laurence Fink told Reuters it was looking at a “fill-in ETF acquisition in another country.

(Reporting By Jessica Toonkel; editing by Carol Bishopric)

State Street Introduces 2 New Corporate Bond ETFs

By Benzinga.com

State Street’s STT -0.55% State Street Global Advisors unit, the second-largest U.S. ETF sponsor, will introduce two new bond ETFs on Tuesday.

The SPDR BofA Merrill Lynch Crossover Corporate Bond ETF will track an index that offers exposure to dollar-deonominated U.S.-issued BBB and BB-rated corporate debt. BBB is the lowest investment grade rating and BB is a non-investment grade rating.

Qualifying securities must have at least one year remaining term to maturity, a fixed coupon schedule and a minimum amount outstanding of $250 million. Original issue zero coupon bonds, 144a securities, both with and without registration rights, and pay-in-kind securities, including toggle notes, qualify for inclusion. Callable perpetual securities qualify provided they are at least one year from the first call date. Fixed-to-floating rate securities also qualify provided they are callable within the fixed rate period and are at least one year from the last call prior to the date the bond transitions from a fixed to a floating rate security, according to XOVR’s prospectus.

SSgA will also introduce the SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF . Other ETF sponsors have already found success with emerging markets corporate bond ETFs, a fact that could either bode well for the SPDR BofA Merrill Lynch Emerging Markets Corporate ETF or indicate the ETF is late to the party.

The WisdomTree Emerging Markets Corporate Bond Fund EMCB +0.42% , which debuted in March, now has almost $60 million in assets under management. The iShares Emerging Markets Corporate Bond Fund (bats:CEMB), which debuted in April, has over $10 million in AUM.

Expense ratios were not included in the prospectus for either XOVR or EMCD.