State Street’s (NYSE:STT) SPDR brand is one of the most recognizable brands in the ETF universe. With that superior brand recognition comes heft. As of June 26, SPDR is the third-largest U.S. ETF sponsor and has $642.6 billion in ETF assets under management. That is more than triple the amount of its next-largest peer.
In terms of sheer population, there are hundreds of SPDR ETFs, but among the issuer’s most well-known offerings are the SPDR S&P 500 ETF (NYSEARCA:SPY), the world’s largest ETF; the SPDR Gold Shares (NYSEARCA:GLD), the world’s largest gold-backed fund; and a the largest (by assets) lineup of sector ETFs, including the Financial Sector Spider ETF (NYSEARCA:XLF).
SPDR ETFs span an array of asset classes, including stocks, bond, commodities and real estate, among others. Additionally, there are some inexpensive SPDR ETFs, meaning frugal investors can find plenty of funds to embrace in the SPDR lineup.
You probably already know about the likes of GLD and SPY, so let’s look at some other SPDR ETFs that may merit a place in your portfolio.
SPDR S&P Dividend ETF (SDY)
Expense ratio: 0.35% per year, or $35 on a $10,000 investment.
SPDR ETFs include several dividend funds and the SPDR S&P Dividend ETF(NYSEARCA:SDY) is one of the gems of the bunch. Home to $18.54 billion in assets under management, SDY is one of the largest dividend ETFs, but this SPDR ETF impresses on several other fronts, including its status as a clear quality play.
SDY targets the S&P High Yield Dividend Aristocrats and while that index overtly says “high yield” in its name, this SPDR ETF is a credible dividend growth play because the index requires member firms to have dividend increase streaks of at least 20 years. That is one of the longest such requirements among all dividend funds.
“Due to the index screen for 20 years of consecutively raising dividends, stocks included in the Index have both capital growth and dividend income characteristics, as opposed to stocks that are pure yield,” according to State Street.
SDY holds 112 stocks and allocates over a third of its combined weight to the industrial and financial services sectors.
SPDR S&P Bank ETF (KBE)
Expense ratio: 0.35%
Speaking of the financial services sector, one of the best SPDR ETFs to consider over the near-term is the SPDR S&P Bank ETF (NYSEARCA:KBE). Unlike the aforementioned XLF, KBE is dedicated to bank stocks, meaning investors will not find diversified financial companies or property and casualty insurance providers in this SPDR ETF.
KBE is up nearly 16% year-to-date, an impressive resurgence after bank stocks languished in 2018. More good news for this SPDR ETF and rival bank funds emerged on June 28 following the completion of the Federal Reserve’s Comprehensive Capital Analysis and Review, or CCAR.
To put things simply, the CCAR results pave the way for many of the largest U.S. banks, including plenty of KBE components, to significantly boost dividends and share repurchase efforts. KBE yields just 2.11% so there is plenty of room for dividend growth with this SPDR ETF.
SPDR Gold MiniShares Trust (GLDM)
Expense ratio: 0.18%
Gold has been a torrid pace, putting the spotlight on related ETFs, including the SPDR Gold MiniShares Trust (NYSEARCA:GLDM). A simple way of looking at this SPDR ETF is that it is the cost-effective counterpart to the aforementioned GLD.
“Shares of GLDM are designed for investors who want a cost-effective and convenient way to invest in gold and will be offered on a continuous basis,” according to State Street.
In late June, GLDM celebrated its first birthday and the SPDR ETF has more than $788 million in assets under management, indicating investors like a good deal with gold ETFs, too.
With the Federal Reserve poised to lower interest rates and the dollar already weakening, this SPDR ETF could continue surging over the near term.
SPDR Portfolio Emerging Markets ETF (SPEM)
Expense ratio: 0.11%
With $2.74 billion in assets under management, the SPDR Portfolio Emerging Markets ETF (NYSEARCA:SPEM) is not a small SPDR ETF, but it is overlooked relative to some other emerging markets ETFs offered by rival issues. That said, SPEM has at least one thing going for it: currently, it is the cheapest emerging markets ETF available in the U.S.
SPEM offers broad, cost-effective emerging markets exposure as it holds 1,542 stocks from nearly 30 countries. Investors should note South Korean stocks are not part of this SPDR ETF because SPEM tracks and S&P index and that index provider classifies South Korea as a developed market. China, Taiwan and India combine for about 59% of SPEM’s geographic exposure.
Due to the lack of South Korea exposure, investors should expect SPEM to generate significantly different returns over the long-term than the MSCI Emerging Markets Index. This SPDR ETF has adequate exposure to growth sectors with communication services and consumer discretionary names combining for about a quarter of the fund’s roster.
SPDR Bloomberg Barclays Convertible Securities ETF (CWB)
Expense ratio: 0.40%
SPDR ETFs featured an extensive lineup of fixed funds, including some products with niche focuses. For its part, the SPDR Bloomberg Barclays Convertible Securities ETF (NYSEARCA:CWB) is the dominant name among convertible bond ETFs and index funds.
In the fixed income space, convertibles are one of the segments with high correlations to equities because convertible bonds can be converted into common stock of the underlying issuer. With that in mind, it is not surprising to see CWB perform well when equities are doing the same.
Though this point may be rendered moot over the near-term because the Fed could lower interest rates, long-term investors may want to consider CWB because convertible bonds often outperform other fixed income assets when interest rates rise. Due to its upside linkage to equities, that is CWB’s primary form of investor compensation, meaning the fund is a lower yielder compared to traditional corporate bond ETFs.
SPDR S&P Biotech ETF (XBI)
Expense ratio: 0.35%
The SPDR S&P Biotech ETF (NYSEARCA:XBI) is one of the most popular biotech ETFs and sets itself apart in a crowded field by being an equal-weight, not a cap-weighted fund. This SPDR ETF’s 119 holdings have a weighted average market value of $10.3 billion, indicating this is primarily a mid-cap fund.
XBI’s weighting methodology leads to vastly different returns relative to its cap-weighted rivals. While the tilt to smaller stocks makes this SPDR ETF more volatile than cap-weighted biotech funds, XBI has outperformed the Nasdaq Biotechnology Index by a margin of better than 2-to-1 over the past three years.
This SPDR ETF is up nearly 20% year-to-date and some market observers see more upside coming for biotechnology stocks and ETFs.
“In the last month this group has actually been the best-performing sector of any of the major groups,” said Newton Advisors technical analyst Mark Newton in an interview with CNBC. “Just in the last couple of weeks, you’ve seen this entire downtrend since late last year be broken in health care relative to the S&P,” he said of a trendline stretching from its peak in December to mid-May.”
SPDR S&P International Dividend ETF (DWX)
Expense ratio: 0.45%
The SPDR S&P International Dividend ETF (NYSEARCA:DWX) is over 11 years old and has nearly $833 million in assets under management, so this SPDR ETF is neither new nor small, but it can be overlooked. Still, DWX is a practical option for investors looking for exposure to high dividend ex-US stocks.
This SPDR ETF “seeks to provide exposure to the 100 highest yielding international common stocks that have passed certain sustainability and earnings growth screens,” according to State Street.
DWX is a focused fund with just 97 holdings, but its dividend yield of 4.03% is more than double that of the S&P 500. Up nearly 13% year-to-date, DWX is outperforming the MSCE EAFE Index by about 100 basis points.
DWX provides exposure to 20 countries, three of which are developed markets, but Canada and Australia combine for almost 34% of the fund’s weight.
Todd Shriber owns shares of XLF.
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