ETFs Perform as Promised During Market Turmoil
SYDNEY - August 17, 2011
Exchange traded funds (ETFs) performed exactly as intended during the recent market volatility, according to State Street Global Advisors (SSgA).
Australia’s flagship ETF, the SPDR® S&P®/ASX 200 Fund (STW), enjoyed high liquidity and tight spreads throughout the recent market turmoil and closely tracked the index net asset value, despite the extreme volatility.
Frank Henze, Asia Pacific Head of ETFs at SSgA said “One of the key benefits of the SPDR S&P/ASX 200 Fund is its liquidity, allowing it to be traded at such a tight bid/ask spread. Last week we saw trading in the fund increase by up to 1000 percent. 4.5 million STW units were traded throughout the week ensuring investors were able to trade when they most wanted to do so.
“As a result of this high liquidity the fund was able to maintain a very tight spread. On Tuesday August 9, one of the most volatile days, the average spread on the fund was just 6bps compared to spreads of between 20bps and 27bps for other similar ETFs.
“The key benefits of ETFs are transparency, simplicity and value for money and the fund exhibited precisely these characteristics during the recent turmoil.”
Mr Henze said despite the concerns in the markets last week the high volumes did not represent investors selling out.
“One might assume that investors were simply getting out of ETFs last week given the fears that were prevalent at the time. However our data shows investors were using ETFs to gain exposure to the equity market in equal measure.
“There were no net redemptions during the week and in fact on one of the most volatile days we saw a significant temporary creation, indicating many investors saw the fund as an efficient way to gain market exposure.”
The SPDR S&P/ASX 200 Fund also gave investors accurate exposure to the Australian benchmark.
“Despite the highest equity market volatility since the GFC the fund accurately mirrored the market ups and downs, with performance of the fund deviating from the index by no more than 0.01 percent,” added Mr Henze.
About SPDR® ETFs
Offered by SSgA, SPDR ETFs are a family of ETFs that provide professional investors with the flexibility to select investments that are precisely aligned to their investment strategy. Recognised as the industry pioneer, SSgA created the first ever ETF in 1993 (SPDR S&P® 500) as well as the first and largest ETF in Australia (SPDR S&P/ASX 200 Fund) and manages approximately US$266 billion of ETF assets worldwide.*
For more information about our ETFs or how to invest, please call +612 9240 7600 or go to www.spdrs.com.au
*Source: SSgA Global ETF Strategy & Research, as of 30 June 2011. This AUM includes the assets of the SPDR Gold Trust (approx. US$58 billion [as of 30 June 2011]), for which State Street Global Markets, LLC, an affiliate of State Street Global Advisors serves as the marketing agent.
About State Street Global Advisors
SSgA is a global leader in asset management. The firm is relied on by sophisticated investors worldwide for its disciplined investment process, powerful global investment platform and access to every major asset class, capitalisation range and style. SSgA is the asset management business of State Street, one of the world’s leading providers of financial services to institutional investors.
Disclaimer: The issuer of units in SPDR S&P/ASX 200 Fund (ARSN 097 712 377) is State Street Global Advisors, Australia Services Limited (ABN 16 108 671 441, Australian financial services licence number 274900). A product disclosure statement (“PDS”) for the fund is available at www.spdrs.com.au. Investors should consider the PDS in deciding whether to acquire, or continue to hold, units in an ETF. An investment in a Fund does not represent a deposit with or a liability of any company in the State Street Corporation group of companies including State Street Bank and Trust Company (ABN 70 062 819 630, AFSL 239679) and is subject to investment risk including possible delays in repayment and loss of income and principal invested.
An investment in SPDR does not represent a deposit with or liability of any company in the State Street group of companies including State Street Bank and Trust Company (ABN 70 062 819 630) and is subject to investment risk including possible delays in repayment and loss of income and principal invested. No company in the State Street group of companies, including State Street Global Advisors, Australia Services Limited, State Street Bank and Trust Company and State Street Global Advisors, Australia, Limited guarantees the performance of SPDR or the repayment of capital or any particular rate of return.
The information in this document is general information only and does not take into account your individual objectives, financial situation or needs. You should consider whether the information in this document is appropriate for you in light of your objectives, financial situation and needs. You should also obtain the PDS for any ETF referred to in this document before making any decision about whether to invest.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns.
These investments may have difficulty in liquidating an investment position without taking a significant discount from current market value, which can be a significant problem with certain lightly traded securities. Diversification does not ensure a profit or guarantee against loss.
"SPDR" is a trademark of Standard & Poor's Financial Services LLC ("S&P") and has been licensed for use by State Street Corporation. STANDARD & POOR'S, S&P, SPDR, S&P 500 have been registered in many countries as trademarks of Standard & Poor's Financial Services LLC and have been licensed for use by State Street Corporation. No financial product offered by State Street Corporation or its affiliates is sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P and its affiliates make no representation, warranty or condition regarding the advisability of buying, selling or holding units/shares in such products. Further limitations and important information that could affect investors' rights are described in the PDS for the applicable product.
Standard & Poor's S&P Indices are trademarks of Standard & Poor's Financial Services LLC.
“S&P” and “ASX” as used in the term S&P/ASX 200, are trademarks of Standard & Poor's Financial Services LLC ("S&P") and the Australian Securities Exchange ("ASX") respectively, and has been licensed for use by State Street Global Advisors, Australia, Limited. SPDR products are not sponsored, endorsed, sold or promoted by S&P or ASX, and neither S&P nor ASX make any representation regarding the advisability of investing in SPDR products. You should consider the PDS in deciding whether to acquire, or to continue to hold such products.
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