A recent filing from State Street Global Advisors indicates the firm is planning to expand its single-country family of “Quality Mix” ETFs with the addition of a U.S. fund. The firm already has 12 international funds currently trading that track MSCI’s Quality Mix indexes, which are a part of its “Risk Premia” index family.
The MSCI Risk Premia indexes are factor-based indexes that target specific factors like size, momentum and value. The quality mix index methodology, however, combines three separate factor indexes, equal-weighting them: value, low volatility and quality.
According to MSCI, those are three of the most important factors in active strategies, and stocks exhibiting those characteristics, based on academic research, tend to offer higher returns.
The SPDR MSCI USA Quality Mix ETF will join a family of a dozen ETFs, including three regional and nine country-specific funds that all launched during 2014:
- SPDR MSCI EAFE Quality Mix ETF (QEFA | C-77)
- SPDR MSCI Emerging Markets Quality Mix ETF (QEMM | D-81)
- SPDR MSCI World Quality Mix ETF (QWLD | C-76)
- SPDR MSCI Australia Quality Mix ETF (QAUS |B-86)
- SPDR MSCI Canada Quality Mix ETF (QCAN)
- SPDR MSCI Germany Quality Mix ETF (QDEU | B-86)
- SPDR MSCI Japan Quality Mix ETF (QJPN | C-85)
- SPDR MSCI Spain Quality Mix ETF (QESP | B-85)
- SPDR MSCI United Kingdom Quality Mix ETF (QGBR | C-86)
- SPDR MSCI Mexico Quality Mix ETF (QMEX)
- SPDR MSCI South Korea Quality Mix ETF (QKOR)
- SPDR MSCI Taiwan Quality Mix ETF (QTWN)
In a rather interesting twist, the fund will essentially offer investors the same exposure they could get by combining three iShares ETFs: the iShares MSCI USA Quality Factor ETF (QUAL | A-80), the iShares MSCI USA Size Factor ETF (SIZE | B-75) and the iShares MSCI USA Value Factor ETF (VLUE | B-85).
Currently, they have a total of more than $1.4 billion in assets under management. They were originally seeded by the Arizona State Retirement System with $100 million each, as was a fourth fund that targets the momentum factor.
These three funds each come with an expense ratio of 0.15 percent, or $15 per $10,000 of assets invested, so it will be interesting to see how much SSgA charges for its own ETF combining the three targeted factors.
That filing did not include a ticker or expense ratio, but did indicate the fund would have its primary listing on the NYSE Arca.