State Street Global Advisors (SSGA) has reduced the management costs on six of its SPDR ETFs, including the firm’s flagship SPDR S&P/ASX 200 Fund (STW).
STW, which was Australia’s first ETF and is the largest ASX 200 ETF with $4.6 billion in assets under management (AUM), has had its fee cut from 13 to 5 basis points (bps).
According to SSGA, the newly announced management cost reductions, which are effective as at 1 November, cover 67 per cent of its total SPDR Australia AUM.
“We are excited to be able to offer investors some of the most cost-effective ETF offerings in their respective peer groups,” commented Kathleen Gallagher, head of SPDR ETFs Australia at State Street Global Advisors.
“These ETFs include a broad range of asset classes and investment styles which help investors build resilient and diversified portfolios, while also limiting the impact fees can have on long-term performance.”
Within the category of Australian equities, the SPDR S&P/ASX 200 ESG Fund (E200) has similarly seen its fee slashed from 13 to 5 bps.
Fees have also been cut on SSGA’s smart beta range including the SPDR MSCI Australia Select High Dividend Yield Fund (SYI) from 35 to 20 bps, the SPDR S&P Global Dividend Fund (WDIV) from 50 to 35 bps, and the SPDR MSCI World Quality Mix Fund from 40 to 18 bps.
SSGA said the management cost reductions for these dividend and multi-factor ETFs made them some of the lowest cost options available in the market.
“These fee changes demonstrate our commitment to the democratisation of investing by delivering cost effective institutional quality investment solutions to investors,” said Ms Gallagher.
“For investors, these changes now mean they could now pay as little as $5 per annum in management costs on an account balance of $10,000 for Australian equities, $10 per annum for Australian government fixed income and as little as $18 for factor-based investing in international equities.”
Rounding out the new fee cuts, the SPDR S&P/ASX Australian Government Bond Fund has had its management costs reduced from 22 to 10 bps.
Within the past year, fee reductions have also been announced by many of SSGA’s competitors in the Australian market including Betashares, BlackRock, and Vanguard.
Speaking with InvestorDaily, Stockspot founder and chief executive officer Chris Brycki said that this ongoing trend represented “great news” for ETF investors in Australia.
“Broadly, it’s great news when these fund providers reduce their fees, because the big beneficiary are the investors that have invested into these funds,” he said.
“It has been for decades now that ETFs have been generally pushing fees lower as they get more scale and size, and then passing on the benefits of that scale and size to the end investors. So overall, I think it’s great news for investors.”
But Mr Brycki suggested that ETF providers have been engaging in “a bit of gameplay” when it comes to fee cuts, especially for their Australian share ETFs.
“What we’ve noticed over the last few years is that, particularly in some of the areas like broad-based Australian shares where it’s very competitive, just offering a fund that’s one or two basis points less than the next guy gives you great PR credibility and ability to market your product,” he continued.
“Even though the difference is pretty minor, that headline is something that the big issuers really want to own, even though they may also have products in their portfolio that are much higher fee and much have a much higher margin.”
According to Mr Brycki, ETF providers are “really battling it out” in the broad-based category of ETFs covering Australian shares, US shares, and global shares.
“But there is a lot less competition and a lot less going on in terms of price reductions at higher product, higher fee end of the spectrum,” he added.
