Zenith has reaffirmed its ratings on four ETFs from State Street Global Advisors.
The results were as follows:
- SPDR® S&P/ASX 200 Fund (ASX: STW) – HIGHLY RECOMMENDED (upgraded from Recommended)
- SPDR® S&P/ASX 50 Fund (ASX: SFY) – RECOMMENDED (retained)
- SPDR® S&P/ASX 200 Listed Property Fund (ASX: SLF) – RECOMMENDED (retained)
- SPDR® MSCI Australia Select High Yield Dividend Fund (ASX: SYI) – RECOMMENDED (retained).
The SSgA SPDR ETFs are operated by State Street Global Advisors (SSgA). Three is the ETFs track key Australian equity market indicies provided by S&P with the fourth ETF (SYI) tracking a customised high dividend yield index from MSCI.
The ETF’s objectives are to track their respective defined benchmark indices and deliver index like returns while minimising transaction costs and tracking error. Indexation strategies are essentially full replication with the exception of SLF which is managed on a price basis with accrued income held in cash.
Zenith’s View
Zenith continues to have solid conviction in SSgA’s ETF platform. As a global ETF manager, the ability of SSgA to draw on the knowledge and expertise of their global capabilities is a key differentiator for the firm in designing and managing ETFs in the Australian marketplace. Management fees for the Funds are highly competitive in the ETF universe and the respective market segments. The combination of robust levels of market trading of the Funds as well as the market makers works to keep the market bid/ask spreads fairly tight which we see as a significant advantage as this aids quality of trade execution.
Zenith continues to view these ETFs as being generally suited to investors seeking low cost access to index returns with high transparency. We have upgraded the rating on STW given its position as a highly liquid ETF in the marketplace with very tight tracking error and extremely tight bid/ask spreads which make for excellent, frictionless transaction efficiency.