State Street rolls out ETF
State Street Global Advisers (SsgA) will roll out its first two exchange traded funds (ETF) for the local market this afternoon.
The funds, dubbed the streetTRACKS 50 and streetTRACKS 200, will track the S&P/ASX 50 and 200 indices and will be managed and distributed by State Street Global Advisors, who also developed the funds.
An ETF is a listed security designed to track the performance of an established index or predetermined basket of securities. The ability to trade an ETF enables investors to buy and sell units at a known price throughout the trading day via the stock exchange, compared to managed funds, which are generally priced once a day at the end of the day.
The launch of the funds comes later than SSgA first predicted when it toldMoney Managementin September last year that it expected to launch by April.
However the group says it has been working extensively with the Australian Stock Exchange (ASX) in ensuring the funds complied fully with local requirements with had caused part of the delay.
SSgA managing director Mark Lazberger says the funds are lower cost and better flexibility for accessing the local share market than unit trusts.
“As listed funds, both streetTRACKS 50 and streetTRACKS 200 will be priced continuously throughout the day. This price transparency empowers investors to control exactly when they want to transact,” Lazberger says.
At the time of the announcement with the ASX earlier this year SSgA was negotiating for the development of ETFs over the S&P/ASX 20, the S&P/ASX 50, the S&P/ASX 100, the S&P/ASX 200, the S&P/ASX 300 and the All Ordinaries Index.
However the likelihood of an ETF based on the S&P/ASX 100 was diminished when Salomon Smith Barney (SSB) became the first group to launch an ETF into the local market. The group rolled out its fund in late February this year with its IndexShares100 product which tracks the S&P/ASX 100 Index.
BNP Paribas Asset Management followed this up in July with the listing of Australia’s first actively managed ETF’s under the banner of Access funds.
A prospectus for the streetTRACKS funds has been lodged with the Australian Securities and Investments Commission and following the statutory exposure period the two new funds are expected to be listed for trading in later this month.
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