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New SPDR Tracks Over-the-Counter S&P 500 Companies

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NEW YORK (–State Street Global Advisors introduced on the American Stock Exchange an exchange-traded fund based on the Standard & Poor’s 500 0-Strip Index, which carves out from the broader S&P benchmark all companies traded over-the-counter.

This addition to SPDR ETFs allows a trader to purchase in a single transaction 75 companies that constitute 15% of the total market capitalization of the S&P 500. Information technology is the largest component of the 0-Strip Index, with a 72% share. Many hedge funds use SPDRs, for example, to short the technology sector.

The SPDR 0-Strip ETF provides quick exposure to a group of stocks that do not have a primary listing on the New York Stock Exchange or on the Amex. The single security makes it easy and cost effective to trade this group, said Gus Fleites, managing director at Boston-based State Street Global Advisors.

Instead of having to go to different dealers, traders can get the stocks in pre-bundled form, said Robert Shakotko, managing director at Standard & Poor’s index services.

Trading was strong as soon as the ETF was launched on the morning of Sept. 15, with 75,000 shares sold in 10 minutes. Futures on the ETFs are expected to be offered in a few weeks. The specialist is Bear Hunter.

Since the first SPDR became available in 1993, these instruments have been popular, creating an industry with more than US$160 billion in assets.

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Contact Bob Keane with questions or comments at: [email protected].