As part of State Street Global Advisors' (SSgA's) aggressive expansion of its exchange-traded funds (ETF) franchise, the fund manger launched three new Select Sector SPDRs ETFs on February 6th covering the Select Sector Biotech (XBI), Select Sector Homebuilder (XBH), and Select Sector Semiconductor (XSD) indexes.
This represents the first expansion of the powerful Select Sector franchise beyond the pure sector level, and down to the industry level. Previously, SSgA offered only nine Select Sector SPDR funds, covering the nine core sectors of the market. The Select Sector SPDRs currently hold a dominant market share of sector ETF assets, with the nine Select Sector SPDRs managing over $14 billion in assets as of January 31, 2006, a total which exceeds the total assets of the sector fund families of iShares, Vanguard, Nasdaq and PowerShares combined (in the U.S.).
"The biotechnology, home construction and semiconductor industries have in recent years been key growth drivers or leading indicators of the U.S. economy," said Greg Ehret, co-head of SSgA's Advisor Strategies unit. "With professional investors seeking to inject higher return potential into their portfolios, these new SPDRs are uniquely designed so that investors gain the most direct exposure to their respective industries."
The S&P Select Industry Indexes are constructed from a universe of more than 5,000 securities that collectively comprise the S&P Total Market Index. This index measures the performance of common equities listed on the NYSE, the Amex, NASDAQ National Market and NASDAQ Small Cap exchanges. Interestingly each S&P Select Industry Index is constructed with an equal-weighted methodology and is rebalanced quarterly.
"Until now, financial advisors seeking exposure to distinct segments of the market had few affordable and liquid options from which to choose," said Jim Ross, co-head of SSgA's Advisor Strategies unit. "The introduction of these ETFs demonstrates our ability to provide investors with acost-effective and simple method of trading
distinct slices of the of the US economy. There's demand by investors, both large and small, to have the ability to break up their investment decisions into more finite industry-type products"
State Street Global Advisors is currently the second largest manager of ETFs, with over $93 billion in global ETF assets under management. SSgA is second only to Barclays Global Investors (BGI) in the space. BGI has over $208 billion in global ETF assets under management as of January 31, 2006. SSgA takes the prize (barely) over BGI as the largest investment manager in the world, with over $1.4 trillion under management, just ahead of BGI's total.
The launch of these products is just the latest in the recent re-vitalization of SSgA's ETF line-up. The firm launched nine new ETFs in November: three industry focused banking ETFs using indexes from Keefe, Bruyette and Wood, which break up the financial services industry into Banking, Capital Markets and Insurance sub-components; five style ETFs based on teh Dow Jones Wilshire indexes, which together with existing funds, give SSgA a complete style ETF line-up for the first time; and a dividend-focused fund.
For a complete rundown on the bewildering array of new sector indexes with tradeable products to match, read Matt Hougan's recent feature on the topic: