State Street Global Advisors is shaking up its suite of developed market single-country SPDR exchange-traded funds by changing the indexes, names, tickers and expense ratios on four products, the company announced Tuesday. It also plans to roll out a Hong Kong-focused ETF on Wednesday.
SSGA is swapping the MSCI StrategicFactor smart beta indexes formerly used for funds invested in Canada, Germany, Japan and the United Kingdom in favor of market capitalization-weighted indexes from Solactive.
The prior smart beta indexes that all four funds tracked were composed of large- and mid-cap companies and were equal weighted based on a composite score incorporating three factors—value, quality and low volatility.
The new indexes from Solactive will track the performance of large- and mid-cap companies comprising the largest 85 percent of the free-float market capitalization in each respective country.
“We find investors tend to use single-country funds more tactically and are looking for that market beta exposure,” says Matthew Bartolini, head of SPDR Americas Research. “So even though they had strong performance, they weren’t reflective of how investors were allocating portfolios, so we decided to make the change to a more traditional market cap-weighted exposure for these select countries.”
The SPDR MSCI Canada StrategicFactors ETF (QCAN) is now the SPDR Solactive Canada ETF (ZCAN); the SPDR MSCI Germany StrategicFactors ETF (QDEU) becomes the SPDR Solactive Germany ETF (ZDEU); the SPDR MSCI United Kingdom StrategicFactors ETF (QGBR) is replaced by the SPDR Solactive United Kingdom ETF (ZGBR); and the SPDR MSCI Japan StrategicFactors ETF (QJPN) is now called the SPDR Solactive Japan ETF (ZJPN).
Net expense ratios on all four funds were slashed from 0.30 percent to 0.14 percent.
The three-year annualized returns on three of the four funds have topped the MSCI ACWI Ex USA Index, which is used by Morningstar as the performance benchmark for these products. The Japan and Canada funds are up 9.73 percent and 9.06 percent, respectively, during that time versus 7.46 percent for the MSCI ACWI Ex USA Index, while the Germany fund is up 7.80 percent and the United Kingdom fund has gained 3.63 percent on average during the past three years.
Regarding the SPDR Solactive Hong Kong ETF (ZHOK) scheduled to launch Wednesday, that will track the market cap-weighted Solactive GBS Hong Kong Large & Mid Cap Index, which has the same mandate as the indexes for the above-mentioned four funds. And likewise, its net expense ratio will be 0.14 percent.
SSGA's suite of four developed market single-country ETFs hasn't been a big hit with investors since they debuted four years ago, with assets under management ranging from $10 million in the United Kingdom fund to more than $29 million in the Canada fund, according to Morningstar. Lowering fees is one way to generate more interest, but the new expense ratios still trail those of comparable funds targeting Canada, Germany, Japan and the United Kingdom that Franklin Templeton launched last November as part of a large rollout of international ETFs. Those four products, along with a Hong Kong-focused fund that also launched at that time, all have expense ratios of 0.09 percent.