State Street Global Advisors launches SPDR MSCI World Value UCITS ETF
State Street Global Advisors has launched the SPDR MSCI World Value UCITS ETF, which tracks the performance of global developed market equities with a higher weighting applied to equities exhibiting low valuation characteristics.
The ETF will track the MSCI World Value Exposure Select Index, which is derived from the MSCI World Index, which includes large and mid-cap securities across 23 developed markets. The index is designed to represent the performance of companies that exhibit relatively higher value exposure within the parent index, while also seeking to avoid poor quality companies, “value traps,” and ensuring sector neutrality. It consists of the top 350 securities, based on the highest combined ‘Value Select’ score, has a 5 per cent maximum stock weighting, and is rebalanced semi-annually, with a 50 per cent turnover buffer.
Providing investors with a global offering, the new ETF is the latest addition to the SPDR Value Exposure Select offering, which already includes an ETF that tracks the MSCI USA Value Exposure Select Index, and one that follows the MSCI Europe Value Exposure Select Index.
The indices are unique in that they incorporate both quality and value metrics to help avoid value traps in selection and allocation. In contrast, Enhanced Value indices only use valuation metrics.
“Investors using Value strategies to take advantage of cheap stocks need to protect their portfolios against stocks that are ‘cheap for a reason’. Our suite of ETFs tracking the MSCI Value Exposure Select Indices enables investors to access strong value factor exposure, while seeking to avoid value traps using a light quality touch,” says Matteo Andreetto, Head of SPDR ETF Business, EMEA.
Ryan Reardon, ETF Strategist, SPDR, says: “Against a Covid-19 backdrop, investors are looking for geographical diversification in Select Value strategies. Currently, Value looks cheap based on valuation spreads, and value stocks often perform well in the recovery phase following a recession. Given uncertainty around the shape and timing of the recovery, value investing offers a relatively attractive complement to a well-diversified portfolio.”
The SPDR MSCI World Value UCITS ETF has a TER of 0.25 per cent. It launches with a primary listing in EUR on Euronext, Amsterdam on 3 September 2020, with secondary listings in USD and GBP to follow on the London Stock Exchange on 4 September 2020.