State Street Global Advisors announced benchmark changes for the SPDR MSCI USA Value UCITS ETF and the SPDR MSCI Europe Value UCITS ETF …
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Mandy Chiu, Head of EMEA and APAC SPDR Product for SPDR ETFs
Effective 11 July, these two ETFs changed their benchmarks to the MSCI USA Value Exposure Select Index and the MSCI Europe Value Exposure Select Index respectively.
The change will lead to a reduction in the number of securities in each ETF from over a thousand in aggregate, to 125 holdings per index. The result will be a higher conviction value exposure. The indices are designed to be sector neutral with an issuer cap of 5%, targeting value companies without taking on excessive sector or single security biases.
“The performance of the MSCI Value Exposure Select Index challenges the perception that value investing no longer works,” said Mandy Chiu, Head of EMEA and APAC SPDR Product for SPDR ETFs. “There has been this widely-held view in the market that many value strategies have underperformed, but research demonstrates that the very high value exposure offered by the MSCI Value Exposure Select Index delivered returns in excess of the MSCI USA Index over the past 10 years.*”
“We believe good factor strategies should provide high exposure to the targeted factors while keeping untargeted exposures in check. The value funds now reflect the latest thinking in value investing, integrating strong value exposure with a quality filter which looks to avoid the value trap. Altering the benchmark for these funds responds to client demand for greater intensity in their value orientation.”
*Source: State Street Global Advisors; MSCI, correct as 31 May 2018