State Street has launched eight new exchange-traded funds on the German stock exchange, taking the company’s European ETF range to 21 in total.
State Street Global Advisors is the second largest global ETF provider, with US$210 billion under management at the end of April 2011, according to BlackRock. In Europe, however, the firm has struggled to establish a presence, despite launching its first ETF (tracking the Dutch AEX index) ten years ago. At the end of the first quarter of 2011, the fund manager ranked only 17th among European ETF providers by assets under management, according to BlackRock, with just over US$1 billion in total funds invested.
In preparation for a relaunch of its European ETF business, in the middle of last year State Street rebranded its European fund range under the “SPDR” name, having previously used the logo “Streettracks”.
State Street’s eight new ETFs are issued from a Dublin-based umbrella fund structure, SSgA SPDR ETFs Europe I plc, which is distinct from the French-domiciled SPDR ETFs umbrella fund used for the firm’s existing 13 ETFs.
The new funds include five new emerging market trackers, based on the MSCI EM Asia, MSCI EM Europe and MSCI EM Latin America regional indices, the broad MSCI Emerging Markets index and the capitalisation-based MSCI EM Small Cap index.
Two funds track the MSCI All Country World index and the MSCI All Country World Investable Market index, with the latter offering additional exposure to small-cap stocks within an all-country framework. Both these MSCI indices combine the developed and emerging markets categories and State Street’s ETFs are the first of their type in Europe.
State Street has also stolen a leap on competitors with the launch of its Barclays Capital Emerging Markets Local Bond fund, the first European ETF to offer exposure to this market sector. The ETF’s benchmark, the Barclays Capital Emerging Markets Local Currency Liquid Government index, is designed to provide a broad measure of the performance of tradeable local currency emerging markets debt. Individual country exposure is limited to a maximum of 10 percent of the overall index.
The new funds have total expense ratios of between 0.5 percent and 0.65 percent per annum.
All of the State Street ETFs use physical replication to track their indices, despite the recent preference among European ETF issuers for synthetic (swap-based) replication, particularly when it comes to emerging markets