Industry Updates

State Street to close low volatility and emerging market debt ETFs

$40.3m EM inflation-linked local bond ETF to close

Theo Andrew


State Street Global Advisors (SSGA) is shutting two ETFs that are “uneconomic to operate”.

In a shareholder notice, SSGA said it would be closing the SPDR STOXX Global Low Volatility UCITS ETF (GLOW) and the SPDR Bloomberg EM Inflation Linked Local Bond UCITS ETF (EMIL) on 11 May.

It comes as the net asset value (NAV) of both ETFs fell below the minimum specified amount laid out in their respective prospectuses.

SSGA told investors: “The board took this decision in accordance with the articles of association of the company because the NAV of each fund is currently less than the minimum amount specified in the prospectus.

“The board does not believe that it will increase materially in the near future and the funds are uneconomic to operate. The board is of the opinion that the proposed terminations are in the best interests of the funds' shareholders.”

GLOW currently houses $5.3m assets under management (AUM) while EMIL has a more significant AUM of $40.4m.

Emerging market debt, along with much of the fixed income market, has enjoyed a renaissance so far this year with US dollar weakness and the China re-open play helping countries repay their debt.

EMIL has followed this trend, returning 6.3% in the first three months of the year while GLOW has had a relatively mild start to the year, up 0.9% over the same period.

Investors fled low-volatility ETFs in the early part of the year on the assumption inflation had peaked.

Elsewhere across its ETF range, SSGA slashed the fees on its all-country world index (ACWI IMI) ETF last month, undercutting its closest rival BlackRock in the ongoing global equity ETF price war.

The SPDR MSCI ACWI IMI UCITS ETF (SPYY) will see its total expense ratio (TER) cut from 0.40% to 0.17%, below the 0.20% fee of the iShares MSCI ACWI UCITS ETF (SSAC).

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