State Street Global Advisors (SSGA) has announced significant reductions to the total expense ratios (TER) of its Europe-domiciled ETFs providing traditional and ESG-enhanced exposure to the S&P 500.
SSGA is planning notable fee cuts to its suite of S&P 500 UCITS ETFs.
Effective from 1 November 2023, the $5.4 billion SPDR S&P 500 UCITS ETF (SPY5) will see its TER plummet from 0.09% to a mere 0.03%.
Currency-hedged access to the S&P 500 will also be available for a nominal fee of 0.05%, down from the previous 0.12%.
Following the fee cut, SPY5 will be the lowest-cost S&P 500 ETF in Europe, two basis points cheaper than its closest competitor, the $18.6bn Invesco S&P 500 UCITS ETF (SPXS).
The $800 million SPDR S&P 500 ESG Leaders UCITS ETF (SPPY), meanwhile, will also similarly be priced at 0.03% following a fee cut from 0.10%.
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SPPY tracks the S&P 500 ESG Leaders Index which screens the S&P 500 to remove proven violators of UN Global Compact principles, companies embroiled in severe ESG-related controversies, and firms with business activities linked to alcohol, civilian firearms, controversial weapons, gambling, genetically modified organisms, military weapons, nuclear power, oil & gas, palm oil, recreational cannabis, thermal coal, and tobacco.
The methodology then selects the companies with the highest S&P DJI ESG scores while targeting 40% of the number of constituents from each Global Industry Classification Standard (GICS) industry group.
The fee cuts are particularly relevant considering US equities form a crucial part of European investors’ portfolios. Post the Global Financial Crisis, the stature of US equities has escalated among this demographic, culminating in 2018 when total assets in US equity ETFs domiciled in Europe eclipsed those of European equity ETFs.
According to Matteo Andreetto, Head of SPDR EMEA business at SSGA, these fee cuts are not cursory changes but a tangible testament to the firm’s sustained endeavor to provide high-caliber investment solutions at competitive price points.
Andreetto said: “These changes are significant for our professional investor base. For 30 years we have been leading the way in S&P 500 exposures, and this is the latest example of our work to make these products even more accessible and affordable without compromising on quality.”