Skip to main content

Market Overview

The Famous SPY ETF Is Getting A Low-Cost Stablemate

Share:
The Famous SPY ETF Is Getting A Low-Cost Stablemate

Home to nearly $300 billion in assets under management as of Dec. 19, the SPDR S&P 500 ETF (NYSE: SPY) remains the world's largest and most heavily traded exchange traded fund.

SPY, which debuted in January 1993, is also the oldest U.S.-listed ETF and with an expense ratio of just 0.0945% per year, or $9.45 on a $10,000 investment, the fund fits the bill as inexpensive. However, SPY has faced increased competition in recent years from rival S&P 500 ETFs, namely the iShares Core S&P 500 ETF (NYSE: IVV) and the Vanguard S&P 500 ETF (NYSE: VOO).

VOO and IVV were two of the fastest-growing ETFs of the soon to be completed and lower fees explain why. VOO, the Vanguard offering, charges just 0.03% per year year while IVV has an annual fee of 0.04%.

Why It's Important

State Street is finally fighting back, but it's not introducing a new ETF. Rather, the third-largest U.S. ETF sponsor is converting the $3.31 billion SPDR Portfolio Large Cap ETF (NYSE: SPLG) to an S&P 500 ETF.

According to a statement of addition information (SAI) issued earlier this week, SPLG, which currently tracks the SSGA Large Cap Index, will begin tracking the S&P 500 on Jan. 24. SPLG's current expense ratio of 0.03% will be maintained, putting it into a tie with VOO for the honor of least expensive S&P 500 ETF.

State Street has previously used a similar strategy with some success. For example, rather than lower the fee of the SPDR Gold Shares (NYSE: GLD), a favorite of active traders and professional investors, the firm introduced a lower cost counterpart. The SPDR Gold MiniShares Trust (NYSE: GLDM) debuted in June 2018 and now has nearly $1.1 billion in assets under management.

GLDM charges 0.18% per year, or 22 basis points less than GLD.

What's Next

There's more.

State Street's SAI reveals the SPDR Portfolio Total Stock Market ETF (NYSE: SPTM) will move to the S&P Composite 1500 Index next month. With SPTM's current expense ratio of 0.03%, it will be tied with the iShares Core S&P Total U.S. Stock Market ETF (NYSE: ITOT) for least expensive ETF tracking that benchmark.

The SPDR Portfolio Small Cap ETF (NYSE: SPSM) is moving to the popular S&P SmallCap 600 Index. With SPSM's annual fee of 0.05%, the fund undercuts the iShares Core S&P Small-Cap ETF (NYSE: IJR) and the Vanguard S&P Small-Cap 600 ETF (NYSE: VIOO), both of which track the same index.

Related Links:

Cheap, New ESG ETFs Launch

Consider These Leveraged ETFs In Q1

 

Related Articles (SPY)

View Comments and Join the Discussion!

Posted-In: News Broad U.S. Equity ETFs Trading Ideas ETFs Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com