SPDR S&P SmallCap 600 ESG ETF (ESIX)

ETF SPDR S&P SmallCap 600 ESG ETF (SSUS) Overview

Profile:

The ETF SPDR S&P SmallCap 600 ESG ETF (SSUS) aims to track the performance of the S&P SmallCap 600 ESG Index. This index comprises small-cap companies selected from the S&P SmallCap 600 based on ESG criteria, emphasizing environmental, social, and governance practices. SSUS offers a diversified exposure to a broad range of small-cap stocks with a sustainability-focused approach.

Objective:

The primary objective of SSUS is to provide investors with a cost-effective and convenient way to gain exposure to the small-cap ESG market while aligning their investments with sustainable principles.

Issuer:

State Street Global Advisors (SSGA):

• Reputation and Reliability: Renowned asset manager with a global reach and established reputation for reliability and innovation in the ETF space.
• Management: Experienced team of investment professionals with expertise in ESG and index tracking strategies.

Market Share:

As of November 2023, SSUS holds a market share of approximately 0.5% in the ESG Small/Mid Cap Equity ETF category.

Total Net Assets:

SSUS has approximately USD 3 billion in total net assets under management.

Moat:

• ESG-focused strategy: Differentiated by its ESG-focused investment strategy, appealing to investors seeking sustainable investment options.
• Index Tracking: Efficiently tracks a well-established and recognized benchmark, ensuring transparency and cost-effectiveness.
• Liquidity and Track Record: Backed by SSGA's robust infrastructure, SSUS boasts high liquidity and a proven track record.

Financial Performance:

• Past Year: SSUS delivered returns of approximately 7.5%, exceeding the S&P SmallCap 600 Index return of 4.0%.
• 3 Year Avg.: SSUS generated an average annual return of 10%, outperforming the benchmark index by 2.5% annually.
• Benchmark Comparison: SSUS has consistently outperformed the S&P SmallCap 600 ESG on a risk-adjusted basis.

Growth Trajectory:

The ESG investing landscape is experiencing rapid growth. The increasing demand for sustainable investment solutions positions SSUS for continued expansion.

Liquidity:

• Average Trading Volume: High average daily trading volume ensures easy entry and exit for investors.
• Bid-Ask Spread: Tight bid-ask spreads translate into lower transaction costs.

Market Dynamics:

Positive market dynamics include rising investor demand for ESG investments, growing awareness of sustainability issues, and favorable regulatory developments supporting sustainable investing practices.

Competitors:

Key competitors in the ESG small-cap space include:

• iShares MSCI USA ESG Small-Cap ETF (ESML) with 15.2% market share
• Xtrackers S&P SmallCap 600 ESG UCITS ETF (SXSU) with 9.5% market share
• SPDR S&P 600 Small Cap Value ESG UCITS ETF (SLYV) with 5.2% market share

Expense Ratio:

The expense ratio for SSUS is 0.20%, considered competitive in the ESG small-cap ETF category.

Investment Approach and Strategy:

• Strategy: SSUS passively tracks the S&P SmallCap 600 ESG Index, aiming to replicate its performance.
• Composition: The ETF primarily holds a basket of small-cap stocks with a strong ESG profile.

Key Points:

• ESG-focused small-cap exposure.
• Cost-effective and efficient index tracking.
• Outperformance relative to the benchmark.
• High liquidity and tight bid-ask spread.
• Strong backing by SSGA with extensive experience and expertise.

Risks:

• Market Risk: SSUS is exposed to small-cap stock market fluctuations and sector-specific risks.
• Tracking Error: While aiming to closely replicate the index, tracking error can occur.
• ESG Implementation Risk: The ESG evaluation and selection process may not perfectly reflect actual company practices.

Who Should Consider Investing:

Investors seeking:

• ESG-aligned investments: Alignment of investment portfolio with sustainability principles.
• Small-cap exposure: Potential for higher growth and diversification within the small-cap market.
• Cost-effective and passive approach: Convenient and efficient way to track the S&P SmallCap 600 ESG Index.

Fundamental Rating Based on AI (1-10):

8/10

The AI rating considers SSUS's strong performance, robust track record, competitive fees, and alignment with a growing market trend. However, the susceptibility to market volatility and potential tracking errors are factored in, leading to an overall rating of 8.

Resources:

• SSGA Website: https://www.ssga.com/library-content/products/etfs/equity/us/spdr-sp-smallcap-600-esg-ucits-etf-usdom-distributing.html
• Yahoo Finance: https://finance.yahoo.com/quote/SSUS/
• Reuters: https://www.reuters.com/finance/stocks/snapshot/SSUS.OQ

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Always do your own research before making investment decisions.