State Street Global Advisors, the second-largest ETF provider by assets, filed paperwork with U.S. regulators to market six actively managed equities ETFs, serving up size- and style-focused opportunities for investors looking to capture capital appreciation.
The two separate filings amount to SSgA’s increasing effort to expand its footprint in the active ETFs space, a segment that still represents only a minor fragment of the total $1.3-plus trillion in total U.S.-listed ETF assets. Many analysts and market participants say that the next wave of growth in the 20-year-old, mostly passive, ETF industry might very well come from actively managed strategies.
In one filing, SSgA detailed plans for three value and growth plays on the broad U.S. equities market that will generally be focused on larger-cap names. They include:
- SPDR MFS Systematic Core Equity ETF, which relies on a bottom-up approach to selecting securities based on fundamental and quantitative analysis in an effort to invest in companies that show best growth potential and value relative to peers.
- SPDR MFS Growth Equity ETF, which is similar to the Core strategy, but focuses exclusively on companies that show solid growth potential.
- SPDR MFS Systematic Value Equity ETF, which also relies on the bottom-up approach used in the broader Core strategy to hone in on valuation plays.
Separately, the risk-focused plays look to generate returns that are competitive with broad-market returns, the second filing said.
- SPDR SSgA Risk Aware ETF picks securities from the Russell 3000 universe and invests in those it sees to be in line with “investor risk preferences” in a strategy that results in defensive or risk-seeking exposure depending on the anticipated level of risk in the broad market. For example, in periods of anticipated low risk, the portfolio may increase its allocation to riskier securities and include small cap and growth companies.
“Due to ongoing market fluctuations, the Adviser believes the resulting ebbing and flowing of risk preferences give this strategy the potential to provide competitive returns relative to the Russell 3000 Index over the long term,” the firm said in the latter filing. SSgA Funds Management is the advisor for the fund.
- SPDR SSgA Large Cap Risk Aware ETF is similar to the broader Risk Aware ETF, except that it allocates as much as 80 percent of the portfolio to large cap names selected from the Russell 1000 universe.
- SPDR SSgA Small Cap Risk Aware ETF focuses on small-cap names picked from the Russell 2000 universe.
SSgA, which is behind the SPDR S&P 500 ETF (NYSEArca: SPY)—the world’s largest ETF with more than $100 billion in assets, launched its first actively managed ETFs in April, but has since put others in registration.
No tickers or planned fees were disclosed in either filing.
Buyers—and sellers—beware: Trading mistakes can be costly, but they are avoidable.
Investors have fewer—but better—choices.
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For VIX-related ETFs to work as that ‘magical’ hedge, you have to time the market. Good luck with that.