State Street Global Advisors on Sept. 5 announced the launch of three new ETFs, including what it says is the lowest-cost U.S. fund offering exposure to emerging markets excluding China.
The SPDR S&P Emerging Markets ex-China ETF, which has the ticker symbol XCNY, aims to track a market capitalization-weighted index of large-, mid- and small-cap emerging market companies that excludes companies domiciled in China, SSGA said in a news release.
By excluding Chinese equities, the ETF “may allow investors to manage their China risk exposure separately, while still seeking high growth and capital appreciation potential from emerging market economies,” the news release said.
Priced at 15 basis points, the ETF is the lowest-cost U.S. fund offering exposure to emerging markets excluding China, the release said, citing Morningstar data.
“Several issuers have launched EM ex-China strategies in recent years, and those are the EM strategies getting most of the new investment right now,” said Bryan Armour, director of passive strategies research for North America at Morningstar Research Services, a Morningstar subsidiary.
When it comes to China, investors are likely concerned about “the government’s grip on the economy and escalating tensions between China and the U.S.,” Armour said.
Six of the last 20 ETF launches in the diversified emerging markets Morningstar Category have been strategies that explicitly exclude Chinese stocks, he added.
In the 12 months ended Aug. 31, explicitly ex-China emerging markets ETFs have attracted $9.7 billion of net inflows, most of which went into the $15.8 billion iShares MSCI Emerging Markets ex China ETF, Armour said. Meanwhile, the remainder of the ETFs in the diversified emerging markets Morningstar category saw net outflows totaling $2.6 billion during that period, he said.
In addition to the SPDR S&P Emerging Markets ex-China ETF, SSGA also launched the SPDR SSGA US Equity Premium Income ETF and the SPDR Bloomberg Enhanced Roll Yield Commodity Strategy No K-1 ETF, according to the release.
The SPDR SSGA US Equity Premium Income ETF, which will trade under the ticker symbol SPIN, is an actively managed ETF. It will seek to provide current income while maintaining the potential for long-term growth, according to an information sheet available on SSGA’s website.
“The fund invests in a portfolio of large- and mid-cap U.S. stocks that the investment advisor believes exhibit desirable characteristics such as strong fundamentals, attractive valuations and long-term growth prospects, while dynamically selling call options on a U.S. large-cap exposure, such as the S&P 500 index, to generate additional monthly income,” the information sheet said.
The SPDR Bloomberg Enhanced Roll Yield Commodity Strategy No K-1 ETF, which has the ticker symbol CERY, will seek to track the total return performance of the Bloomberg Enhanced Roll Yield Total Return Index, the release said.
SSGA, the asset management arm of State Street, had $4.37 trillion in assets under management as of June 30, according to the release. That included nearly $1.4 trillion in ETF AUM.
