Sitting between active and index strategies, smart beta represents an evolution in index investing and an opportunity for investors. Rather than simply weighting stocks by market cap, these indices are constructed to identify and exploit specific factors.
Investors can capture these exposures by utilizing the SPDR range of Smart Beta ETFs, which has funds offering exposure to the value, volatility and quality dividend factors.
Smart Beta ETFs can help investors achieve targeted outcomes through factor-based investing.
Factor investing seeks to systematically identify and exploit specific drivers of risk and return, aiming to deliver a premium above the traditional market-cap benchmarks.
ETFs can be used to track a specific factor index to deliver diversified, transparent and cost-efficient3 access to smart beta.
Take Shelter When Faced With Volatility
In uncertain times, it may be a good idea to adopt a defensive posture while staying fully invested in the equity markets. This can be achieved through a low volatility strategy.
The SPDR low volatility ETFs track indices that are weighted according to the volatility of the underlying stocks rather than their market capitalisation, which provides a measure of protection against market downturns.
We believe these ETFs could generate higher returns than cap-weighted strategies over the long term, exploiting the so-called 'low volatility anomaly'.
Moreover, a low volatility strategy may be particularly suited to those investors who are not required to adhere to any particular benchmarks and who wish to take cover from heightened market volatility.
Vipul Faujdar, SPDR ETFs – UK Wealth explains how low volatility strategies can offer upside participation while introducing defensiveness into portfolios.
Value Investing for the Long Term
Academic evidence has shown the outperformance of companies with lower valuations over the long run on a risk-adjusted basis, as documented by studies such as Fama-French.4
The SPDR range of value ETFs is based on indices that emphasise metrics such as sales, book value and earnings to provide a comprehensive measure of value.
Investors looking for specific exposure to value companies can select from US and Europe. Additionally, SPDR offers ETFs that emphasise both value and smaller-sized companies to suit those investors with specific allocation preferences.
Companies that consistently pay higher dividends often possess sound fundamentals, such as lower debt and stable earnings. When seeking dividend yield, these are important characteristics, as they can insulate a company from a sudden market downturn.
The SPDR Dividend Aristocrats ETFs are weighted according to the highest yielding dividend stocks, with a filter to emphasise those companies that have sustained or increased dividends over time.
1 Source: Morningstar, as of 30 April 2019. 2 Source: FactSet, as of 30 April 2019. 3 Frequent adding of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs. 4 Source: Journal of Financial Economics 33 (1993), Common risk factors in the returns on stocks and bonds by Eugene Fama and Kenneth French.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns. Changes in exchange rates may have an adverse effect on the value, price or income of an investment. Further there is no guarantee that an ETF will achieve its investment objective. SSGA SPDR ETFS MAY NOT BE AVAILABLE OR SUITABLE FOR YOU. THE VIEWS EXPRESSED/INFORMATION IN THIS SITE DOES NOT CONSTITUTE INVESTMENT ADVICE, FINANCIAL, LEGAL, REGULATORY, ACCOUNTING OR TAX ADVICE. INDEPENDENT ADVICE SHOULD BE SOUGHT IN CASES OF DOUBT. NEITHER THE INFORMATION NOR ANY OPINION CONTAINED ON THIS SITE CONSTITUTES A SOLICITATION OR OFFER TO BUY OR SELL SHARES OF THE FUNDS OR ANY OTHER FINANCIAL INSTRUMENT. Standard & Poor's®, S&P® and SPDR® are registered trademarks of Standard & Poor's Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation's financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
SPDR ETFs may be offered and sold only in those jurisdictions where authorised, in compliance with applicable regulations.
Information related to Mexico
This information does not constitute and is not intended to constitute marketing or an offer of securities and accordingly should not be construed as such. The Funds referenced herein have not been, and will not be, registered under the Mexican Securities Market Law (Ley del Mercado de Valores) and may not be publicly offered or sold in the United Mexican States. Disclosure documentation related to any of the aforementioned Funds may not be distributed publicly in Mexico and shares of the Funds may not be traded in Mexico.
European SPDR ETFs
SSGA SPDR ETFs Europe I Plc and SSGA SPDR ETFs Europe II Plc are investment companies with variable capital constituted as umbrella funds with segregated liability between sub-funds under the laws of Ireland and authorized by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011.
You should obtain the Prospectus and Key Investor Information Document (KIID) relating to specific SPDR ETFs and read them carefully prior to investing. For further information and the Prospectus/KIID describing the characteristics, costs and risks of SPDR ETFs, download a Prospectus or KIID here, talk to your financial advisor, or obtain it from your local SSGA office.
US SPDR ETFs
The US domiciled SPDR ETFs named on this site (excluding SPDR Gold Shares & SPDR Gold MiniShares Trust) are only permitted to be marketed into the relevant EEA jurisdiction pursuant to either Article 42 of AIFMD (as implemented under national laws of such member state); or (ii) can otherwise be lawfully offered or sold (including on the basis of an unsolicited request from a professional/Qualified investor). Some of the US domiciled SPDR ETFs mentioned in this site are alternative investment funds for the purpose of the European Union Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (“AIFMD”). SSGA Funds Management, Inc. and State Street Global Advisors Trust Company are the alternative investment fund managers (“AIFMs”) of these Funds.
Before investing, consider the funds' investment objectives, risks, charges and expenses. To obtain a prospectus which contains this and other information, download a prospectus here, or talk to your financial advisor. Read it carefully before investing.