Benefits and Uses of ETFs

SPDR ETFs offer tools for global asset allocation, access to world markets and sectors, high liquidity to ensure tight bid-ask spreads, and volume for institutional traders.

Benefits of ETFs

  • Access the performance of global markets, and active investment strategies with different ETFs. 
  • Invest confidently with the creators of the first US ETF, State Street.
  • Achieve asset allocation with market-wide diversification benefits.
  • SPDR ETFs offer many cost-efficient applications for institutional investors. 
  • Multiple institutional applications:
    • market (beta) portfolios, 
    • asset allocation (strategic, dynamic and tactical),
    • global market and sector tilting,
    • cash equitisation, 
    • liquidity management,
    • fixed income duration,
    • credit adjustment,
    • transition management, and
    • transaction management. 
  • Highly liquid with tight bid/offer spreads supports execution at best price.

Uses of ETFs

Market (Beta) Portfolios:

SPDR ETFs offer the components for developing cost-efficient, physically-backed index and sector exposures for beta across global markets.

Asset Allocation:

SPDR ETFs offer strategic, dynamic and tactical asset allocation with low fees, low cost, tight bid-offer, and physical backing to ensure optimised market-tracking. The also offer deep liquidity for larger, block trading and derivative applications.

Global Market and Sector Tilting:

SPDR ETFs are useful for optimising portfolios and tilting to themes or sectors within a targeted investment policy.

Cash Equitisation:

Remain fully invested while maintaining liquidity.

Liquidity Management:

The significantly high liquidity of SPDR ETFs offer institutional investors the ability to maintain market exposures and tilts, with the liquidity needed to meet underlying cash flow demands (either interms of cash inflows, or outgoing cash obligations).

Fixed Income Duration:

SPDR ETFs offer fixed income and duration exposure to institutions as an efficient and liquid package, as opposed to building and sourcing fixed income duration issue-by-issue.

Credit Adjustment:

SPDR ETFs can be deployed to adjust for credit risk exposures, or for tilting across the credit spectrum.

Flexible Transaction Management:

SPDR ETFs can provide investors with a new spectrum of flexibility. Unlike unlisted mutual funds — which are often priced at the end of the day regardless of the time of day an application is made to subscribe for or redeem units — SPDR ETFs trade on exchange throughout the day.

Investors can also employ traditional share trading techniques, including stop orders, limit orders, and margin purchases (if available) using SPDR ETFs. This flexibility empowers investors to determine exactly when they want to transact, while also affording them greater price transparency.

Transition Management:

When institutional investors change asset managers, one of their overriding concerns is preserving the ability to maintain equity exposure while the transition occurs. One way to achieve this goal is to liquidate the portfolio while simultaneously buying a relevant ETF. Once the assets are transitioned, the new manager can redeem the ETF shares to pay for share purchases.

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