State Street Global Advisors
(SSgA), is reducing fees for trustee and administrative services provided to the Standard & Poor's Depositary Receipts
(SPDR) Fund. This fee reduction was prompted by the success the fund has realized since its inception in 1993.
Expenses for the SPDR Fund will be capped at 12 basis points (0.12%) for the next two years. Assets in the SPDR have increased almost 50% in the past year to approximately $16 billion and average daily trading volumes total nearly $1 billion.
Industry experts say the reason for the price reduction is a result of competition. Barclays Global Investors
is slated to release its funds at 10 basis points (0.10%).
A spokesperson for SSgA said, "Barclays and State Street compete all the time in business. Competitive price pressures do exist but this was not the reason for the reduction in price."
The goal of the reduction was to make the product attractive. After speaking to market makers and customers it was decided that a discount was the best way to achieve just that, the spokesperson said.
Some forward thinking insiders believe that these exchange traded products are the future of the fund industry. Rumors have been buzzing that Nuveen Investments
will be the next fund company to announce an ETF line-up.
At the beginning of the month Nuveen hired Gary Gastineau
, exchange traded funds guru from American Stock Exchange. It is believe that his products should be coming out of the pipeline shortly.
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