So many new exchange-traded funds, so little time. That is a reasonable sentiment, as hundreds of new ETFs come to market every year. 2016 is no exception to that rule. Among this year's crop of new ETFs proving to be worth investors' time is the SPDR Series Trust SPDR SSGA Gender Diversity Index ETF SHE.
The aptly-tickered SHE ascended to a record high last Friday, and since coming to market in early March, the ETF is higher by nearly 11 percent. By comparison, the S&P 500 is higher by just 10.3 percent year-to-date. SHE is part of the burgeoning crop of environmental, social and governance (ESG) ETFs, not all of which are solid concepts.
SHE Is Proving Herself
However, SHE has proven itself to be one of the better ESG ideas in the ETF space. Over the past five years, the S&P 500 member firms with the highest percentage of female board members “outperformed the broader index by 300 basis points (bps) per year” while topping the 20 S&P 500 companies with the lowest percentage of female board members by an average of 500 basis points per year. SHE tracks the SSGA Gender Diversity Index.
SHE is even gaining credibility as a legitimate alternative to traditional core equity exposure.
“First and foremost, a core equity allocation should provide a broad exposure to the entire opportunity set of economic sectors, and SHE’s index methodology seeks to strike similar sector weights relative to a standard cap weighted index,” said State Street Vice President David Mazza in a recent note. “This means that SHE will not be heavily concentrated to one specific sector, but rather, provide a balanced sector exposure similar to a traditional large-cap core allocation.”
SHE allocates over 34 percent of its combined weight to healthcare and technology companies. Conversely, energy, materials and utilities stocks combine for just over 13 percent of the ETF's weight, according to issuer data.
Importantly, SHE is also inexpensive relative to other thematic ETFs on the market.
“A common refrain regarding ESG investing is that the costs of the active management or rules-based methodology required by the strategy can be prohibitive, particularly for a core allocation. But at just 20 basis points, SHE is the least expensive thematic large-cap US equity ETF in the market today, and is offered at a net expense ratio 60 percent lower than the average expense ratio of a non-thematic US large-cap fund,” added Mazza.
SHE has hauled in $285 million in assets under management, easily making it one of this year's most successful new ETFs.
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