Daily ETF Watch: New Select Sector SPDRs

Family of nine funds will expand for the first time.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

It looks like the family of nine Select Sector SPDRs will expand for the first time since the funds’ launch in 1998.

A new filing from the trust has outlined plans for two ETFs, the Financial Services Select Sector SPDR Fund (XLFS) and the Real Estate Select Sector SPDR Fund (XLRE). The additions reflect changes in the Global Industry Classification Standard (GICS) used by S&P Dow Jones Indices and MSCI that were put into effect in November of last year and split real estate off from the financial sector.

The nine Select Sector SPDRs currently have in the vicinity of $97 billion in assets under management, and the $21 billion Financial Select Sector SPDR (XLF | A-90) is by far the largest of the funds, not to mention one of the largest ETFs trading in the U.S.

XLF Options

The trust could close XLF, or it could convert it into one of the two planned funds and give it a new name, index and ticker. Or the trust could allow it to continue to trade alongside the other funds, and give investors a choice regarding which version of GICS they prefer. After all, the trust does combine technology and telecommunications into one sector, so it does adapt the classification system to fit its needs.

 

The filing did not include expense ratios for either of the funds, but all of the other Select Sector SPDRs come with a price tag of 15 basis points. Like the other ETFs in the family, the funds are slated to list on the NYSE Arca.

The changes will be the biggest alterations to the nine-ETF family since its launch, and although the filing answers the question of whether the Select Sector SPDRs would accommodate the adjustments to the GICS sectors, it also opens up a laundry list of other questions.

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.