State Street Abandons Dow Jones Style-Box ETFs

Nine SPDR ETFs from State Street will undergo significant changes on Monday, December 20, 2010.  All will receive new names and new underlying indexes, and six will get lower expense ratios.  The seven style-box ETFs will receive new ticker symbols, while the two bond ETFs will retain their current symbols.  None will have their history erased or CUSIP changed.

The seven revised style-box ETFs will change their underlying indexes from Dow Jones to S&P.  This moves State Street, and the SPDR brand, away from providing unique style-box ETFs to being the third provider offering S&P style-box ETFs.  It places SPDR head-to-head with iShares and Vanguard with Vanguard currently enjoying a clear price advantage.

These changes go a long way toward eliminating all style-box offerings based on Dow Jones Indexes.  I expect the two remaining ones (large cap blend and mid cap blend) to be closed and liquidated soon.  The two revised bond ETFs will change their underlying indexes from “credit” bonds to “corporate” bonds.

On December 20, 2010:

• SPDR S&P 500 Growth ETF (SPYG) (SPYG overview) will replace SPDR Dow Jones Large Cap Growth ETF (ELG) and maintain the current expense ratio of 0.20%.
• SPDR S&P 500 Value ETF (SPYV) (SPYV overview) will replace SPDR Dow Jones Large Cap Value ETF (ELV) and reduce the expense ratio from 0.21% to 0.20%.
• SPDR S&P 400 Mid Cap Growth ETF (MDYG) (MDYG overview) will replace SPDR Dow Jones Mid Cap Growth ETF (EMG) and reduce the expense ratio from 0.28% to 0.25%.
• SPDR S&P 400 Mid Cap Value ETF (MDYV) (MDYV overview) will replace SPDR Dow Jones Mid Cap Value ETF (EMV) and reduce the expense ratio from 0.34% to 0.25%.
• SPDR S&P 600 Small Cap ETF (SLY) (SLY overview) will replace SPDR DOW Jones Small Cap ETF (DSC) and reduce the expense ratio from 0.32% to 0.20%.
• SPDR S&P 600 Small Cap Growth ETF (SLYG) (SLYG overview) will replace SPDR Dow Jones Small Cap Growth ETF (DSG) and reduce the expense ratio from 0.26% to 0.25%.
• SPDR S&P 600 Small Cap Value ETF (SLYV) (SLYV overview) will replace SPDR Dow Jones Small Cap Value ETF (DSV) and reduce the expense ratio from 0.27% to 0.25%.
• SPDR Barclays Capital Intermediate Term Corporate Bond ETF (ITR) (ITR overview) will replace SPDR Barclays Capital Intermediate Term Credit Bond ETF (same symbol) and maintain the current expense ratio of 0.15%.
• SPDR Barclays Capital Long Term Corporate Bond ETF (LWC) (LWC overview) will replace SPDR Barclays Capital Long Term Credit Bond ETF (same symbol) and maintain the current expense ratio of 0.15%.

Three ETFs not affected by this change are:

• SPDR Dow Jones Large Cap ETF (ELR): State Street already has the S&P version of this one – SPDR S&P 500 ETF (SPY).  I anticipate we will soon be seeing an announcement for the closure of ELR, as it has already made multiple appearances on ETF Deathwatch.
• SPDR Dow Jones Mid Cap ETF (EMM): State Street already has the S&P version of this one – SPDR S&P MidCap 400 ETF (MDY).  I anticipate we will soon be seeing an announcement for the closure of EMM.
• SPDR Dow Jones Total Market (TMW): I suspect that State Street will likely allow this one to survive as it is their only offering in the total U.S. market category.

I could not locate a press release or any reasoning from State Street for these changes.  The only official information I could find was a memo to Authorized Participants regarding changes in the basket composition (pdf).  However, all information and data on the SPDRs website has already been updated to reflect these changes.

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.