New State Street ETF Breaks Fresh Ground

‘SHE’ offers focus on gender diversity while marking SSgA’s first foray into self-indexing.

Reviewed by: Cinthia Murphy
Edited by: Cinthia Murphy

The latest SPDR from State Street Global Advisors is breaking new ground. The SPDR Gender Diversity ETF (SHE) is only the second exchange-traded product to focus on the niche of gender diversity, and it’s the first ETF to do so. Up until now, that theme was only accessible though the Barclays Women in Leadership ETN (WIL).

But SHE also marks the first time SSGA is self-indexing. The firm, which recently obtained regulatory permission to self-index, is the first of the three biggest ETF providers to go this route. Jim Ross, global head of SSGA's SPDR ETFs, tells us what to make of this launch. This is a first-of-a-kind ETF, and it focuses on gender and equality. What's in this portfolio?

Jim Ross: The SPDR SSGA Gender Diversity Index ETF (SHE) is going to basically screen the largest companies in America—all top 1,000—for a specific criteria. That criteria is the amount of gender diversity in the firm—the amount of women in the firm.

Then it will narrow down that universe to an index of between 125 and 150 companies based on their inclusion of women at the CEO, the board or senior management levels. And it looks at it by sector, so that you're really comparing individual sectors in an effort to maintain sector neutrality in the overall index. How often will this mix be rebalanced?

Ross: It's an annual reconstitution and has traditional index rule changes in it for corporate actions and things like that. This ETF doesn’t make sector bets, and it owns mostly large companies, so it should be pretty correlated to the broad market, right? It’s not a diversifier in that respect.

Ross: Exactly. It's basically sourced in the largest 1,000 companies in the U.S. Why this theme? Why gender equality, specifically?

Ross: We had done a significant amount of research on this specific segment with one of our clients, CalSTRS. We work with institutional investors all the time on a variety of different research themes, and this was playing out really strongly in their mind. They inspired us to see if there was a way to bring this to a publicly available product, which they would then consider investing in. So this is a bespoke ETF? The fund’s designed with a client in mind?

Ross: It was inspired by our relationship with them, yes, but I see this as one ETF that will have broad appeal. Some of the historical research on this shows that when you have a gender-diverse leadership team, it does well. MSCI did a study in 2015 that showed companies with strong female leadership had an increase in return on equity compared to other companies of about 36%. State Street is self-indexing this ETF. That’s a first for the firm. Why self-index this fund?

Ross: We just received the relief to self-index in November. We applied for it quite a while ago, and we were looking for a product where we could introduce that. We saw the opportunity to both leverage our self-index relief and bring something we think is uniquely designed and fits the purpose. We were deeply involved in this index’s construction. As far as I can tell, neither iShares nor Vanguard self-indexes, right? So State Street is the first of the big three to do it. Is it important to lead this charge?

Ross: I believe that's right. From the SSGA perspective, we look at this as an opportunity. We've been doing indexing, self-indexing within SSGA's wall for a number of years for private accounts with more of our institutional client base. So it's not completely new and novel that we're doing this. But it’s the first time we've done it through a publicly offered security. That is unique. Anything else you want to point out about this ETF?

Ross: State Street plans on giving back a percentage of its profits from this ETF to a donor-advised fund. That donor-advised fund will contribute to charitable organizations that partner with K-12 schools to address gender bias and prepare girls for future business leadership roles, particularly focusing on the STEM industries: science, technology, engineering and math. An ETF with a mission.

Ross: We see this as a continued expansion of our partnership ETF series, where we have different partners that we work with, but also as an expansion of what I would characterize as our ESG [environmental, social and governance] suite.

We launched a low-carbon strategy a year ago December; we launched fossil-free in December of last year; and we continue to look at that space for other opportunities and see where the demand trends are.

Contact Cinthia Murphy at [email protected].

Cinthia Murphy is head of digital experience, advocating for the user in all that does. She previously served as managing editor and writer for, specializing in ETF content and multimedia. Cinthia’s experience includes time at Dow Jones and former BridgeNews, covering commodity futures markets in Chicago and Brazil equities in Sao Paulo. She has a bachelor’s degree in journalism from the University of Missouri-Columbia.