Country ETFs Go Beta

State Street Global Advisors recently changed the names, indexes, tickers and expense ratios for four of its smart-beta StrategicFactors funds, morphing them into plain-vanilla country funds.

In 2014, the issuer rolled out a series of multifactor “Quality Mix” ETFs targeting different geographies and countries that eventually became the StrategicFactors family. However, the funds did not attract significant assets as a group, and State Street began to close them in 2016.

Yesterday, the following ETFs adopted cap-weighted benchmarks provided by Solactive, along with new names and tickers:

• The SPDR MSCI Canada StrategicFactors ETF (QCAN) became the SPDR Solactive Canada ETF (ZCAN) tracking the Solactive GBS Canada Large & Mid Cap Index.
• The SPDR MSCI Germany StrategicFactors ETF (QDEU) became the SPDR Solactive Germany ETF (ZDEU) tracking the Solactive GBS Germany Large & Mid Cap Index.
• The SPDR MSCI Japan StrategicFactors ETF (QJPN) became the SPDR Solactive Japan ETF (ZJPN) tracking the Solactive GBS Japan Large & Mid Cap Index.
• The SPDR MSCI United Kingdom StrategicFactors ETF (QGBR) became the SPDR Solactive United Kingdom ETF (ZGBR) tracking the Solactive GBS United Kingdom Large & Mid Cap Index.

The four funds also cut their expense ratios by more than half, dropping from 0.30% to 0.14%. Lately, country ETFs have become an area in which issuers are competing on price after years of dominance by the iShares juggernaut.

State Street further rounded out the revamped family by launching the SPDR Solactive Hong Kong ETF (ZHOK), which also tracks a Solactive index and comes with a 14-basis-point expense ratio.

Franklin Templeton has come out with country funds priced at 9 basis points for developed markets and 19 basis points for emerging markets, largely undercutting the competition. However, State Street’s well-established reputation and deep history in the ETF space may make up for that 5 bp difference.

Currently only four ETFs remain in the StrategicFactors family of funds, a U.S. ETF and three regional ETFs.

Contact Heather Bell at [email protected]