Industry Updates

ETF Wrap: SSGA throws down the gauntlet

A fee cut offensive, competition in fixed maturity bonds and barriers to the UK market being removed made headlines this week

Jamie Gordon

State Street Global Advisors (SSGA) may have just declared a fee war with recent fee cuts meaning they now offer two ETFs with the joint-lowest charges in Europe.

The firm cut the fees on the SPDR S&P 500 UCITS ETF (SPY5) and its SPDR S&P 500 ESG Leaders UCITS ETF (SPYY) by at least two thirds to 0.03%.

Some might assume SSGA is losing money on the ETFs, as the fee to licence the underlying vanilla index stands at $600,000, plus three basis points of fund assets under management (AUM) per year.

However, these cuts come three decades after the firm launched SPY in the US – now the world’s largest ETF – meaning it may have brokered its own licencing deal with the index provider.

The ETFs included in the fee cuts were also among 67 strategies recently added to its securities lending programme, which will provide the issuer and investors with additional income.

Competition in fixed maturity

Meanwhile, German ETF issuer DWS plans to rival BlackRock in the fixed maturity space, with a debut product range expected before the end of the year.

DWS CEO Stefan Hoops said its euro corporate bond target maturity ETFs will launch in Q4 following demand from investors. 

The news comes after BlackRock debuted four fixed maturity iBonds ETFs in August, only to add five more ETFs to the range a month later, ETF Stream revealed.

Accessing the UK market post-Brexit

Finally, incoming regulation from the FCA will remove a key barrier to new ETF entrants to the UK market.

The Overseas Fund Regime is set to come in from April next year, enabling fund platforms to be recognised and market and distribute their products to UK investors of all levels.

The OFR replaces the Temporary Permissions Regime (TPR), which enabled existing platforms to passport to the UK, following the end of the Brexit transition period.

ETF Wrap is a weekly digest of the top stories on ETF Stream

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