Investment Product and Service Launches

Art by Jackson Epstein

State Street Global Advisors Makes Changes to ETF Suite

State Street Global Advisors has announced index changes to four of its low-cost SPDR Portfolio exchange-traded funds (ETFs).

The index changes seek to respond to demand to provide a more stratified ETF toolkit that targets segments of the U.S. equity market in a cost-effective way. For investors who prefer broad market exposure, the newly positioned funds include the only ETF currently available tracking the S&P Composite 1500 Index.

“‘Our goal is to offer products with purpose, providing a suite of low-cost precision exposures in an ETF wrapper that can then be deployed by investors as they build portfolios to deliver target investment outcomes,” says Rory Tobin, global head of SPDR Business at State Street Global Advisors. “There is strong investor demand for S&P benchmarks with over $12.5 trillion in global assets tracking their indices.

The index and name changes detailed below are effective as of market open on January 24, 2020.

In addition to these changes, a voluntary fee waiver of 0.10% will be implemented on the SPDR S&P 600 Small Cap ETF (SLY) to lower the fund’s expense ratio from 0.15% to 0.05% effective as of January 24, 2020.

Nationwide Launches Income Solution ETF

Nationwide has launched the Nationwide Risk-Managed Income ETF (NUSI), an income solution that targets high current income with less risk relative to traditional income-focused investments. The fund seeks to provide investors with a measure of downside protection with potential upside participation.

“The persistent low interest rate environment has made it exceedingly more difficult for investors to generate reliable streams of income without taking on additional risk,” says Michael Spangler, senior vice president of Nationwide Financial. “The Nationwide Risk-Managed Income ETF adds to Nationwide’s differentiated lineup of solutions that seeks to deliver better investor outcomes, while managing the short- and long-term risks inherent to retirement planning, with a targeted focus on income generation.”

The fund generates investment income using an options trading strategy called a protective net-credit collar, which is established by selling an upside call option and using a portion of the proceeds received to buy a put option that hedges the downside risk on an underlying portfolio of securities.

The fund will be sub advised by Harvest Volatility Management, an asset management firm specializing in advising, structuring, and managing option related strategies.

The portfolio management team for the fund is comprised of Jonathan Molchan, executive director and lead portfolio manager, Troy Cates, executive director and portfolio manager, and Garrett Paolella, chief operating officer.

“We are very excited to have partnered with Nationwide to bring this investment option to the market,” says Jonathan Molchan. “Given current market conditions, we believe NUSI offers a timely strategy that will help investors meet their income needs in a low yield environment. The fund follows a systematic, risk-managed approach that seeks to provide capital appreciation via U.S. equity exposure.”

Fundamentally designed with income-generation in mind, the Nationwide Risk-Managed Income ETF potentially offers benefits that may address the yield enhancement and volatility management needs of investors, including high monthly income generation; portfolio volatility reduction; reduced duration risk and interest rate sensitivity; capital appreciation from equity participation; downside risk mitigation; and enhanced tax efficiency of index options.

The fund is listed on the New York Stock Exchange and has an expense ratio of 0.68%.