While US equities approach their near pre-crisis all-time highs, the recovery has been concentrated, creating relative value opportunities in specific exposures.
Without a health solution in place, stable dividends and selective value may help investors access the relative value story, while lingering uncertainty in equity price sensitivity may favour a low volatility approach.
SPDR ETFs tracking the Dividends Aristocrats, Low Volatility and Value Exposure Select indices offer a compelling opportunity for investors seeking to remain in (or reinitiate) long positions.
Global equities had experienced a significant drawdown in 2020, related to the global pandemic and the associated economic shutdown. However, last week US equities (S&P 500) pulled within 2.5% of their pre-crisis all-time high (SPX 3394.73, on 19 February 2020).1
No doubt this recovery is encouraging for US equity investors, especially as it comes during a Q2 earnings season that was meant to show the extreme negative impacts of the global COVID-19 pandemic on US corporations. Despite the encouragement, there are some notable features of the recovery and lingering uncertainties, which are preventing a full return to ‘risk-on’ and keeping large stockpiles of cash holdings on the sidelines, across all investor segments.
Since the S&P 500 bottomed on 23 March 2020 (SPX 2247.64) the index has rallied 47% as of 22 July 2020, recovering nearly all the ground lost at the end of Q1. However, this recovery has been largely concentrated with the 5 largest stocks (Apple, Microsoft, Amazon, Facebook and Alphabet) contributing nearly a quarter (c. 24%) of the recovery. Furthermore, nearly half (c. 48%) of the recovery has come from the top 2 sectors (Technology and Health Care) plus Amazon.2 While this has benefitted index investors – and readers of the SPDR SectorCompass – it has left a large part of the US equity market ripe for valuation opportunities as benefits from the recovery expand beyond these sectors.
Investors also remain cautiously optimistic about the prospect of US equities to sustain, or break through, the previous all-time high. We know this because cash holdings remain at historically high levels among institutional real money investors. Clearly investors believe that a sustained, broad-based economic recovery will not be possible until a health solution to the COVID-19 pandemic is on the horizon.
The relative opportunities for investors in US equities at the current valuations may be in three places.
First, investors may benefit from a stable dividend strategy such as Dividend Aristocrats, which in addition to a sizable yield is currently offering investors significant value exposure (see Figure 1). Many companies were forced to slash dividends amidst the COVID-19 pandemic, but our Dividend Aristocrats index has only need to remove 4 stocks this year as a result of dividend suspensions.
Second, investors can also play pure value selectively through our Exposure Select Index, which uses a light quality touch to avoid value traps. This index also offers a relatively attractive yield exposure (Figure 1), so investors can get paid to wait.
Third, for the most cautious long investors, a Low Volatility approach may offer the most aggressive positioning against negative impacts of the lingering uncertainty.
How to play these themes
In one simple trade, investors can access any of these themes using our SPDR ETFs. The SPDR S&P U.S. Dividend Aristocrats UCITS ETF offers investors stable dividend stocks at a relatively attractive valuation. The SPDR MSCI USA Value UCITS ETF offers an opportunity to play value selectively and the SPDR S&P 500 Low Volatility UCITS ETF offers investors a chance to lower portfolio risk by targeting the least volatile S&P 500 stocks. To learn more about these funds, and to view full performance histories, please follow the links below.
Sources: Bloomberg Finance L.P., for the period 16-23 July 2020. Flows are as of date indicated and should not be relied upon as current thereafter.
1 Source: Bloomberg Finance L.P., as of 22 July 2020. 2 Source: State Street Global Advisors, FactSet, as of 22 July 2020. This information should not be considered a recommendation to invest in a particular sector or to buy or sell any security shown. It is not known whether the sectors or securities shown will be profitable in the future.
Marketing Communication. For Professional Client Use Only.
For Investors in Austria: The offering of SPDR ETFs by the Company has been notified to the Financial Markets Authority (FMA) in accordance with section 139 of the Austrian Investment Funds Act. Prospective investors may obtain the current sales Prospectus, the articles of incorporation, the KIID as well as the latest annual and semi-annual report free of charge from State Street Global Advisors GmbH, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89-55878-400. F+49 (0)89-55878-440. Finland: The offering of funds by the Companies has been notified to the Financial Supervision Authority in accordance with Section 127 of the Act on Common Funds (29.1.1999/48) and by virtue of confirmation from the Financial Supervision Authority the Companies may publicly distribute their Shares in Finland. Certain information and documents that the Companies must publish in Ireland pursuant to applicable Irish law are translated into Finnish and are available for Finnish investors by contacting State Street Custodial Services (Ireland) Limited, 78 Sir John Rogerson’s Quay, Dublin 2, Ireland. France: This document does not constitute an offer or request to purchase shares in the Companies. Any subscription for shares shall be ade in accordance with the terms and conditions specified in the complete Prospectuses, the KIID, the addenda as well as the Companies’ Supplements. These documents are available from the Company centralising correspondent: State Street Banque S.A., 23-25 rue Delariviere- Lefoullon, 92064 Paris La Defense Cedex or on the French part of the site spdrs.com. The Companies re undertakings for collective investment in transferable securities (UCITS) governed by Irish law and accredited by the Central Bank of Ireland as a UCITS n accordance with European Regulations. European Directive no. 2014/91/ EU dated 23 July 2014 on UCITS, as amended, established common rules pursuant to the cross-border marketing of UCITS with which they duly comply. This common base does not exclude differentiated implementation. This is why a European UCITS can be sold in France even though its activity does not comply with rules identical to those governing the approval of this type of product in France. The offering of these compartments has been notified to the Autorité des Marchés Financiers (AMF) in accordance with article L214- 2-2 of the French Monetary and Financial Code. Germany: The offering of SPDR ETFs by the Companies has been notified to the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in accordance with section 312 of the German Investment Act. Prospective investors may obtain the current sales Prospectuses, the articles of incorporation, the KIIDs as well as the latest annual and semiannual report free of charge from State Street Global Advisors GmbH, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89-55878-400.
Ireland: State Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered number 145221. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Web: ssga.com.
Israel: No action has been taken or will be taken in Israel that would permit a public offering of the Securities or distribution of this sales brochure to the public in Israel. This sales brochure has not been approved by the Israel Securities Authority (the ‘ISA’).
Accordingly, the Securities shall only be sold in Israel to an investor of the type listed in the First Schedule to the Israeli Securities Law, 1978, which has confirmed in writing that it falls within one of the categories listed therein (accompanied by external confirmation where this is required under ISA guidelines), that it is aware of the implications of being considered such an investor and consents thereto, and further that the Securities are being purchased for its own account and not for the purpose of re-sale or distribution.
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Nothing in this sales brochure should be considered investment advice or investment marketing as defined in the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (“the Investment Advice Law”). Investors are encouraged to seek competent investment advice from a locally licensed investment advisor prior to making any investment. State Street is not licensed under the Investment Advice Law, nor does it carry the insurance as required of a licensee thereunder.
This sales brochure does not constitute an offer to sell or solicitation of an offer to buy any securities other than the Securities offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person or persons to whom it is unlawful to make such offer or solicitation.
Italy: State Street Global Advisors Ireland Limited Milan Branch (Sede Secondaria di Milano) is a branch of State Street Global Advisors Ireland Limited, registered in Ireland with company number 145221, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson’s Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 10495250960 - R.E.A. 2535585 and VAT number 10495250960, and whose office is at Via Ferrante Aporti, 10 - 20125 Milano, Italy. Telephone: (+39) 02 32066 100. Facsimile: (+39) 02 32066 155.
Netherlands: This communication is directed at qualified investors within the meaning of Section 2:72 of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht) as amended. The products and services to which this communication relates are only available to such persons and persons of any other description should not rely on this communication. Distribution of this document does not trigger a licence requirement for the Companies or SSGA in the Netherlands and consequently no prudential and conduct of business supervision will be exercised over the Companies or SSGA by the Dutch Central Bank (De Nederlandsche Bank N.V.) and the Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten). The Companies have completed their notification to the Authority Financial Markets in the Netherlands in order to market their shares for sale to the public in the Netherlands and the Companies are, accordingly, investment institutions (beleggingsinstellingen) according to Section 2:72 Dutch Financial Markets Supervision Act of Investment Institutions. Norway: The offering of SPDR ETFs by the Companies has been notified to the Financial Supervisory Authority of Norway (Finanstilsynet) in accordance with applicable Norwegian Securities Funds legislation. By virtue of a confirmation letter from the Financial Supervisory Authority dated 28 March 2013 (16 October 2013 for umbrella II) the Companies may market and sell their shares in Norway.
Spain: State Street Global Advisors SPDR ETFs Europe I and II plc have been authorised for public distribution in Spain and are registered with the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores) under no.1244 and no.1242. Before investing, investors may obtain a copy of the Prospectus and Key Investor Information Documents, the Marketing Memoranda, the fund rules or instruments of incorporation as well as the annual and semi-annual reports of State Street Global Advisors SPDR ETFs Europe I and II plc from Cecabank, S.A. Alcalá 27, 28014 Madrid (Spain) who is the Spanish Representative, Paying Agent and distributor in Spain or at spdrs.com. The authorised Spanish distributor of State Street Global Advisors SPDR ETFs is available on the website of the Securities Market Commission (Comisión Nacional del Mercado de Valores). Switzerland: The collective investment schemes referred to herein are collective investment schemes under Irish law. Prospective investors may obtain the current sales prospectus, the articles of incorporation, the KIID as well as the latest annual and semi-annual reports free of charge from the Swiss Representative and Paying Agent, State Street Bank International GmbH, Munich, Zurich Branch, Beethovenstrasse 19, 8027 Zurich as well as from the main distributor in Switzerland, State Street Global Advisors AG, Beethovenstrasse 19, 8027 Zurich. Before investing please read the prospectus and the KIID, copies of which can be obtained from the Swiss representative, or at ssga.com. United Kingdom: The Companies are recognised schemes under Section 264 of the Financial Services and Markets Act 2000 (“the Act”) and are directed at ‘professional clients’ in the UK (within the meaning of the rules of the Act) who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates are only available to such persons and persons of any other description should not rely on this communication. Many of the protections provided by the UK regulatory system do not apply to the operation of the Companies, and compensation will not be available under the UK Financial Services Compensation Scheme.
This document has been issued by State Street Global Advisors Ireland (“SSGA”), regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered number 145221. T: +353 (0)1 776 3000. Fax: +353 (0)1 776 3300. Web: ssga.com.
SPDR ETFs is the exchange traded funds (“ETF”) platform of State Street Global Advisors and is comprised of funds that have been authorised by Central Bank of Ireland as open-ended UCITS investment companies.
State Street Global Advisors SPDR ETFs Europe I & II plc issue SPDR ETFs, and is an open-ended investment company with variable capital having segregated liability between its sub-funds. The Company is organised as an Undertaking for Collective Investments in Transferable Securities (UCITS) under the laws of Ireland and authorised as a UCITS by the Central Bank of Ireland.
The information provided does not constitute investment advice. It should not be considered a solicitation to buy or an offer to sell any investment. It does not take into account any investor’s or potential investor’s particular investment objectives, strategies, tax status, risk appetite or investment horizon. If you require investment advice you should consult your tax and financial or other professional advisor. All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
ETFs trade like stocks, are subject to investment risk and will fluctuate in market value. The investment return and principal value of an investment will fluctuate in value, so that when shares are sold or redeemed, they may be worth more or less than when they were purchased. Although shares may be bought or sold on an exchange through any brokerage account, shares are not individually redeemable from the fund. Investors may acquire shares and tender them for redemption through the fund in large aggregations known as “creation units.” Please see the fund’s prospectus for more details.
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The views expressed in this material are the views of SPDR EMEA Strategy & Research through the period ending 23 July 2020 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
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All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.
Investing in foreign domiciled securities may involve risk of capital loss from unfavourable fluctuation in currency values, withholding taxes, from differences in generally accepted accounting principles or from economic or political instability in other nations.
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The ETFs listed above have historically paid dividends to investors and/or invest in the securities of dividend paying issuers; however, there is no guarantee that these ETFs will consistently pay dividends to investors in the future or will appreciate in value. Investors could lose money by investing in ETFs.
Equity securities may fluctuate in value in response to the activities of individual companies and general market and economic conditions.
The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss Regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.
You should obtain and read the SPDR prospectus and relevant Key Investor Information Document (KIID) prior to investing, which may be obtained from spdrs.com. These include further details relating to the SPDR funds, including information relating to costs, risks and where the funds are authorised for sale.
Les ETF se négocient comme des actions, sont exposés au risque d’investissement et leur valeur boursière fluctue. Ils peuvent en outre se négocier à prime ou à décote par rapport à leur VL. Les frais de courtage et les coûts relatifs à l’ETF réduisent les performances.
IL EST POSSIBLE QUE LES SPDR ETF DE SSGA NE VOUS SOIENT PAS DISPONIBLES OU NE VOUS CONVIENNENT PAS. LES OPINIONS/INFORMATIONS PRÉSENTÉES SUR CE SITE NE SAURAIENT CONSTITUER UN CONSEIL EN INVESTISSEMENT OU UN CONSEIL D’ORDRE FINANCIER, JURIDIQUE, RÉGLEMENTAIRE, COMPTABLE OU FISCAL. EN CAS DE DOUTE, DEMANDEZ L'AVIS D'UN CONSEILLER INDÉPENDANT. LES INFORMATIONS ET OPINIONS PRÉSENTÉES SUR CE SITE NE SAURAIENT CONSTITUER UNE SOLLICITATION OU UNE OFFRE D’ACHAT OU DE VENTE DE PARTS DES FONDS OU DE TOUT AUTRE INSTRUMENT FINANCIER.
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Les SPDR ETF ne peuvent être offerts et vendus que dans les juridictions où cela est autorisé conformément aux dispositions légales en vigueur.
Informations relatives au Mexique
Les informations figurant dans ce document ne constituent en aucun cas une offre de titres financiers et ne sauraient être considérées comme telles. Les Fonds mentionnés dans ce document ne sont et ne seront pas agréés en vertu de la Mexican Securities Market Law (Ley del Mercado de Valores). Ils ne peuvent faire l’objet d’aucune offre publique, pas plus qu’ils ne peuvent être vendus sur le territoire des États-Unis d’Amérique. Il est interdit de distribuer publiquement les documents informatifs liés aux fonds susmentionnés sur le territoire du Mexique, tout comme il est interdit d’y échanger des parts des Fonds.
OPCVM SPDR ETFs
SPDR ETFs Europe I Plc et SSGA SPDR ETFs Europe II Plc émettent les ETF SPDR et sont une société d’investissement à capital variable et à compartiments assortis d’une responsabilité séparée. La Société est structurée comme un Organisme de placement collectif en valeurs mobilières (OPCVM) conformément à la législation irlandaise et agréée en qualité d’OPCVM par la Banque centrale d’Irlande.
Ce site web s'adresse uniquement aux investisseurs qualifiés, tels que définis par l'article 10 (3) et (3ter), de la loi suisse sur les placements collectifs de capitaux (« LPCC ») et son ordonnance d'application. Certains fonds peuvent ne pas être enregistrés pour la distribution publique auprès de l'Autorité fédérale de surveillance des marchés financiers (FINMA), qui agit en tant qu'autorité de surveillance en matière de fonds de placement, ou peuvent ne pas avoir désigné de représentant et d'agent payeur suisse. Pour les fonds qui ont désigné un représentant et un agent payeur, les investisseurs intéressés peuvent obtenir les prospectus, les statuts, les DICI ainsi que les derniers rapports annuels ou semestriels disponibles gratuitement auprès du représentant et agent payeur suisse, State Street Bank International GmbH, Munich, succursale de Zurich, Beethovenstrasse 19, 8027 Zurich, ou sur le site https://www.ssga.com, ainsi qu’auprès du distributeur principal en Suisse, State Street Global Advisors AG (« SSGA AG »), Beethovenstrasse 19, 8027 Zurich. Pour les fonds qui n'ont pas désigné de représentant ni d'agent payeur en Suisse, veuillez noter que les fonds sont ouverts aux investisseurs qualifiés, à l'exclusion des investisseurs qualifiés bénéficiant d'une clause d'exclusion (« opting-out ») conformément à l'art. 5(1) de la loi fédérale suisse sur les services financiers (« FinSA ») et sans aucune relation de gestion de portefeuille ou de conseil avec un intermédiaire financier conformément à l'article 10(3ter) de la LPCC (« Investisseurs Qualifiés Exclus »). Pour obtenir plus d'informations et les documents relatifs au fonds, veuillez contacter SSGA AG.
Vous devez vous procurer et lire le prospectus et le document d'information clé pour l'investisseur (DICI) de SPDR avant d’investir. Ils sont disponibles en cliquant ici. Ceux-ci comprennent des informations complémentaires concernant les fonds SPDR, y compris des informations relatives aux coûts, aux risques et où les fonds sont autorisés à la vente.
ETFs SPDR américains
La distribution des intérêts des ETF SPDR américains en Suisse sera exclusivement faite à des investisseurs qualifiés et s'adressera uniquement à ceux-ci, tels que définis par l'article 10(3) et (3ter), de la loi suisse sur les placements collectifs de capitaux (« LPCC ») et son ordonnance d'application. Par conséquent, les ETF SPDR américains ne sont pas enregistrés pour une distribution publique auprès de l'Autorité fédérale de surveillance des marchés financiers (« FINMA »). Certains fonds peuvent ne pas avoir désigné de représentant et d'agent payeur suisse. Pour les fonds avec un représentant et un agent payeur suisse, les investisseurs intéressés peuvent obtenir les documents juridiques liés aux ETFs SPDR américains gratuitement auprès du représentant et agent payeur suisse, State Street Bank International GmbH, Munich, succursale de Zurich, Beethovenstrasse 19, 8027 Zurich, ou sur le site https://www.ssga.com, ainsi qu’auprès du distributeur principal en Suisse, State Street Global Advisors AG (« SSGA AG »), Beethovenstrasse 19, 8027 Zurich. Pour les fonds sans représentant ni agent payeur suisse, veuillez noter que les fonds sont ouverts aux investisseurs qualifiés, à l'exclusion des investisseurs qualifiés ayant une clause d’exclusion (« opting-out ») conformément à l'art. 5(1) de la loi fédérale suisse sur les services financiers (« FinSA ») et sans relation de gestion de portefeuille ou de conseil avec un intermédiaire financier conformément à l'article 10 (3ter) de la LPCC (« Investisseurs Qualifiés Exclus »). Pour obtenir plus d'informations et les documents relatifs au fonds, veuillez contacter SSGA AG.
Avant d’investir, il convient d’analyser les objectifs d’investissement, les risques, les frais et les dépenses des fonds. Pour obtenir un prospectus contenant ces informations et d'autres, téléchargez le ici ou adressez-vous à votre conseiller financier. Lisez-le attentivement avant d'investir.