Industry Updates

State Street to offer Europe’s cheapest S&P 500 ETF after drastic fee cut

SPY5 is currently the fifth-largest S&P 500 ETF in Europe

Jamie Gordon

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State Street Global Advisors (SSGA) is set to offer the cheapest ETF in Europe after slashing the fees on its S&P 500 product by two-thirds.

Effective 1 November, the $5.5bn SPDR S&P 500 UCITS ETF (SPY5) will see its total expense ratio (TER) cut from 0.09% to 0.03%, the cheapest S&P 500 ETF on the European market, undercutting the Invesco S&P 500 UCITS ETF (SPXS) and its 0.05% TER.

The move comes as part of a triple fee reduction across SSGA’s UCITS S&P 500 suite, which also sees the TER of the SPDR S&P 500 EUR Hdg UCITS ETF (SPPE) fall from 0.12% to 0.05% and the SPDR S&P 500 ESG Leaders UCITS ETF (SPPY) from 0.10% to 0.03%.

Following the changes, SSGA will also offer Europe’s lowest-fee currency-hedged and ESG S&P 500 ETFs.

The world’s third-largest ETF issuer noted US equities currently account for more than 60% of global equity indices, with Europe-domiciled ETFs investing close to $15bn a year in US equities over the past decade.

It added the upcoming reductions bring the firm’s total fee reductions over the past two years to 20 across its global ETF roster.

Matteo Andreetto (pictured), head of SPDR EMEA business at SSGA, said: “These changes are significant for our professional investor base.

“This is the latest example of our work to make these products even more accessible and affordable without compromising on quality.

“While these announcements enhance our market competitiveness, they also demonstrate our commitment to improving accessibility; delivering institutional quality investment solutions at competitive price points.”

SPY5’s fee is now a third of the $390bn SPDR S&P 500 ETF Trust (SPY) in the US, the world’s largest ETF, which has a TER of 0.09%.

The fee reduction will be enacted within days of SSGA commencing securities lending on SPY5 and 43 other ETFs from 27 October.

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