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State Street Cuts Fees on 2 Passive Bond ETFs

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What You Need to Know

  • Fees on State Street's mortgage-backed securities and high-yield ETFs were reduced by 0.33%.
  • Its mortgage-backed securities ETF fee is now one basis point less than Vanguard's fee on a comparable fund.
  • Its fee cuts follow cuts by iShares earlier this week, which also made other changes in nine ETFs.

State Street Global Advisors, the world’s third largest asset manager with $3.47 trillion in assets as of Dec. 31, has cut fees on two passive fixed income ETFs by one-third.

The net expense ratio of the SPDR Portfolio High Yield Bond ETF is now 0.10%, down from 0.15% previously, and the next expense ratio of the SPDR Mortgage Backed Bond ETF (SPMB) is 0.04%, down from 0.06%. The latter fee cut, however, is due to a temporary fee waiver of — the gross expense ratio of SPMB is 0.06% — that will last at least through October but could be extended, according to a State Street news release.

As a result of these fee cuts, State Street now offers the lowest-fee ETFs investing in high-yield bonds and mortgage-backed securities, according to the firm. Its mortgage-backed ETF (SPMB) is one basis point cheaper than Vanguard’s Mortgage-Backed Securities ETF (VMBS).

“We are always reviewing our low-cost suite of SPDR Portfolio ETFs for opportunities to reduce the total cost of ownership for investors,” said Noel Archard, global head of SPDR Product at State Street Global Advisors, in a statement. He noted that State Street’s SPDR Portfolio ETFs have attracted more than $65 billion of asset flows since debuting less than four years ago.

The SPDR Portfolio Mortgage Backed Bond ETF has over $3.36 billion in assets and was down 1.27% year-to-date in Wednesday afternoon trading, according to Bloomberg. The SPDR Portfolio High Yield Bond ETF, with $287 million in assets, was up 0.72%. The two ETFs are among 22 ETFs in State Street’s SPDR Portfolio ETF suite whose assets total more than $92 billion.  

For the 12 months through Feb. 28, 2021, State Street Global Advisors had $61.8 billion in asset flows among the top 10 U.S. fund families, trailing only Vanguard and BlackRock’s iShares.

State Street is the second big asset manager to cut fees this week; iShares earlier this week slashed fees on nine ETFs and updated their benchmark indexes as well as their trading symbols. That firm also announced share splits for those ETFs, as did Vanguard for three ETFs.

(Photo: Bloomberg)