Simultaneous Mega ETF Trades Hint at S&P 500 Index Funds Switch
Simultaneous Mega ETF Trades Hint at S&P 500 Index Funds Switch
(Bloomberg) -- Investors seeking exposure to the S&P 500 may be dumping one long-favored exchange-traded fund for its cheaper sibling.
State Street Corp.’s SPDR Portfolio S&P 500 ETF, ticker SPLG, gained $662 million on Thursday, its biggest one-day inflow on record, according to data compiled by Bloomberg.
The money could be coming at the expense of the legendary SPDR S&P 500 ETF Trust, or SPY, which has a higher expense ratio at 0.095% than SPLG at 0.03%. Last month, State Street changed SPLG’s underlying benchmark to the S&P 500 Index instead of its previous SSGA Large Cap Index. That means investors can get a similar exposure as SPY but at a lower cost.
About $657 million worth of SPLG shares hit the tape at 3:49 p.m. in New York Thursday. At the same time, $422 million worth of SPY shares were traded.
The flows represent a bigger quandary that issuers in the $4.7 trillion industry are grappling with as a fee war continues: the risk that decreasing the cost of one fund could take away flows from a pricer product. For example, BlackRock Inc.’s iShares Broad USD High Yield Corporate Bond ETF pulled in $1.4 billion this year while its similar, yet pricer, fund the iShares iBoxx High Yield Corporate Bond ETF lost $830 million.
“While SPY still has an edge for higher trading volume and tighter bid/ask spreads, for buy-and-long-term-hold investors SPLG makes a lot of sense,” said Todd Rosenbluth, CFRA Research’s New York-based director of ETF research.
Following are the fund’s biggest holdings as of Feb. 13:
Name | Ticker | Position | Value (USD) | Change in Position | % of Total Asset Value |
---|---|---|---|---|---|
Microsoft Corp. | MSFT US Equity | 1.1 million | 202.2 million | 4,328 | 5 |
Apple Inc. | AAPL US Equity | 602,713 | 195.8 million | 2,368 | 4.8 |
Amazon.com Inc. | AMZN US Equity | 59,988 | 129 million | 240 | 3.2 |
Facebook Inc. | FB US Equity | 347,060 | 74 million | 1,368 | 1.8 |
Alphabet Inc. | GOOGL US Equity | 43,221 | 65.4 million | 168 | 1.6 |
Alphabet Inc. | GOOG US Equity | 43,060 | 65.2 million | 168 | 1.6 |
Berkshire Hathaway Inc. | BRK/B US Equity | 282,222 | 63.9 million | 1,112 | 1.6 |
JPMorgan Chase & Co. | JPM US Equity | 452,417 | 62.4 million | 1,776 | 1.5 |
Johnson & Johnson | JNJ US Equity | 379,516 | 57 million | 1,488 | 1.4 |
Visa Inc. | V US Equity | 246,887 | 51.2 million | 968 | 1.3 |
To contact the reporter on this story: Claire Ballentine in New York at cballentine@bloomberg.net
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Randall Jensen
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