State Street Corp STT's State Street Global Advisors (SSgA) unit, the third-largest U.S. issuer of exchange-traded funds, is making it even less expensive to invest in its widely followed suite of sector ETFs, commonly known as the SPDRs.
The fees on all nine of the established sector SPDRs have been reduced to 0.14 percent per year from 0.15 percent, meaning investors with $10,000 in a fund such as the Energy Select Sector SPDR (ETF) XLE will pay $14 per year, down from $15.
Boston-based State Street made the announcement regarding the newly reduced fees Thursday, concurrent with the introduction of the Financial Services Select Sector SPDR Fund (The) XLFS and the Real Estate Select Sector SPDR Fund (The) XLRE, both of which came to market with annual expense ratios of 0.14 percent.
The Context
SSgA introduced the new ETFs ahead of real estate becoming the eleventh Global Industry Classification Standard (GICS) sector. That change is scheduled to occur after markets close on August 31, 2016.
In November 2014, S&P Dow Jones Indices and MSCI, two of the largest providers of indices for use with ETFs, announced real estate – previously included as part of the financial services group – would become its own sector.
The sector SPDR ETFs, which also include well-known funds such as the Technology SPDR (ETF) XLK and the Health Care SPDR (ETF) XLV, have progressively become less expense. In February 2014, the suite's fees were reduced to 0.16 percent per year from 0.18 percent.
In February, SSgA announced a wide-ranging fee reduction program, unveiling lower fees for 41 of its ETFs, including broad market, fixed income and international funds.
“When we launched Sector SPDRs in 1998, our expense ratio was 0.65 percent. As more and more institutional and now individual investors have incorporated Sector SPDRs into their investment strategies, we have been able to drive our overall expenses down,” said Dan Dolan, Director – Wealth Management Strategies, Select Sector SPDR Trust, in a statement.
“The result is that today, Select Sector SPDRs are the undisputed leader in sector ETFs by assets and liquidity.”
Vanguard and Fidelity are tied for least expensive sector ETFs as each issuer charges 0.12 percent per for its sector funds.
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