State Street Global Advisors is cutting the expense ratios on the SPDR Portfolio Aggregate Bond ETF (SPAB) and the SPDR Portfolio Corporate Bond ETF (SPBO) to 0.03% each, aiming to undercut its competition in the vanilla bond segment.
The price changes effective Tuesday drop SPBO’s costs by 3 basis points, while SPAB will drop by 1 basis point.
Sue Thompson, head of SDPR Americas distribution for State Street, told ETF.com in an emailed statement that the firm decided to cut costs to investors in its core “Portfolio” group of funds after they accumulated more than $16 billion in inflows year-to-date.
“Coinciding with this growth, we’ve found additional opportunities to reduce the total cost of ownership for investors,” she said.
Competing On Price
State Street’s price reduction appears to be an attempt to take market share from larger bond funds run by BlackRock and Vanguard.
SPBO has $346 million in assets under management compared to the Vanguard Total Corporate Bond ETF (VTC) and the iShares Broad USD Investment Grade Corporate Bond ETF (USIG), which have respective assets of $715.3 million and $5.9 billion and charge 0.05% and 0.04% in expense ratios.
In the combined government/corporate bond segment, SPAB comes in 1 basis point less than the iShares Core U.S. Aggregate Bond ETF (AGG), the Vanguard Total Bond Market ETF (BND) and the Schwab U.S. Aggregate Bond ETF (SCHZ).
However, SPAB’s assets are less than a tenth of AGG and BND’s size:
|AGG||iShares Core U.S. Aggregate Bond ETF||BlackRock||0.04%||$88.36B|
|BND||Vanguard Total Bond Market ETF||Vanguard||0.04%||$78.22B|
|SCHZ||Schwab U.S. Aggregate Bond ETF||Charles Schwab||0.04%||$8.93B|
|SPAB||SPDR Portfolio Aggregate Bond ETF||State Street Global Advisors||0.04%||$6.07B|
|FLCB||Franklin Liberty U.S. Core Bond ETF||Franklin Templeton||0.15%||$1.62B|
|EAGG||iShares ESG Aware U.S. Aggregate Bond ETF||BlackRock||0.10%||$1.33B|
|JAGG||JPMorgan U.S. Aggregate Bond ETF||JPMorgan Chase||0.07%||$1.11B|
|AGGY||WisdomTree Yield Enhanced U.S. Aggregate Bond Fund||WisdomTree||0.12%||$1.06B|
|NUBD||Nuveen ESG U.S. Aggregate Bond ETF||Nuveen Securities||0.20%||$254.16M|
|FLDR||Fidelity Low Duration Bond Factor ETF||Fidelity||0.15%||$236.33M|
State Street’s moves also bring the two ETFs in line with newer fixed income funds. Out of the 21 funds that launched this year, nine have expense ratios between 0.03% and 0.04%, and six other funds charge below the 0.03% threshold.