Asset management giant State Street is reducing the fees investors pay for a group of core ETFs, the company announced Tuesday.
The changes impact roughly half of the SPDR Portfolio ETF suite, including funds focused on U.S. stocks, foreign stocks and fixed income. Combined, the 10 funds hold about $77 billion in assets, according to FactSet. The changes take effect Aug. 1.
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The biggest fund seeing an expense cut is the SPDR Portfolio S&P 500 ETF (SPLG), with roughly $20 billion in assets under management.
SPDR ETF expense cuts
| Fund Ticker | Category | Previous total expense ratio | New TER |
|---|---|---|---|
| SPLG | S&P 500 | 0.03% | 0.02% |
| SPMD | S&P 400 mid cap | 0.05% | 0.03% |
| SPSM | S&P 600 small cap | 0.05% | 0.03% |
| SPDW | Developed world ex-US | 0.04% | 0.03% |
| SPEU | Europe | 0.09% | 0.07% |
| SPEM | Emerging markets | 0.11% | 0.07% |
| SPTS | Short term Treasury | 0.06% | 0.03% |
| SPTI | Intermediate term Treasury | 0.06% | 0.03% |
| SPTL | Long term Treasury | 0.06% | 0.03% |
| SPHY | High yield Bond | 0.10% | 0.05% |
“We look at the fees on a pretty consistent basis, and one of the things that we know is that as funds achieve scale it gives us extra room to be able to make [total expense ratio] reductions. And this has been a very successful lineup for us,” said Sue Thompson, head of SPDR Americas distribution at State Street Global Advisors.
The portfolio suite of ETF is aimed at smaller investors focused on long-term ownership, Thompson said. The funds have lower per-share prices than similar funds, such as the SPDR S&P 500 Trust (SPY), which can make it easier for investors to build out a full portfolio when buying full shares of the funds.
The SPY, which is used as a trading vehicle by many institutional investors, has an expense ratio of 0.0945% and trades around $450 per share. The SPLG will now have an expense ratio of just 0.02% and a per share price of close to $50.
Fund costs have been trending lower in recent decades for all asset managers, as the ETF industry grows in size and pulls assets from higher cost mutual funds. Some firms even offer products with a sticker price of zero for the expense ratio, such as the BNY Mellon Large Cap Core Equity ETF (BKLC).
Thompson said she does not see the SPDR fund expenses ever getting to zero “because of the real costs that are involved in running these funds,” but said the firm does plan to continue to share the savings from the scale of its products with customers.
“When you look at where expense ratios were 15 years ago across the board to today, this has been a massive win for investors. It has been a massive win for smaller investors,” Thompson said.
