State Street Drops Price On 2 Bond ETFs

June 30, 2021

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:

 

Ticker Fund Issuer Expense Ratio AUM
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.

Contact Dan Mika at [email protected], and follow him on Twitter.

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