SPDR® MSCI Emerging Markets StrategicFactors ETF (QEMM)

ETF SPDR® MSCI Emerging Markets StrategicFactors ETF (SPEM)

Profile:

SPEM is an exchange-traded fund that invests in a diversified basket of large and mid-capitalization equities from emerging markets (EMs). It utilizes a multi-factor strategy to select companies based on:

• Value: Identifying stocks with attractive valuations compared to their fundamentals.
• Momentum: Targeting stocks that show strong upward price trends.
• Quality: Selecting companies with strong profitability and low financial leverage.
• Low Volatility: Prioritizing stocks with historically less volatile price movements.

Objective:

SPEM aims to provide long-term capital appreciation by capturing the potential for growth in emerging markets while mitigating risks through its multi-factor approach.

Issuer:

SPEM is issued by State Street Global Advisors (SSGA), one of the world's largest asset managers with approximately $4.1 trillion in assets under management as of December 31, 2023.

Market Share:

SPEM is the largest multi-factor emerging market ETF, with around 4.7% of the market share in its category as of November 2023.

Total Net Assets:

SPEM has over $13.3 billion in total net assets as of November 2023.

Moat:

• First-mover advantage: SPEM is one of the first multi-factor ETFs in the emerging market space, giving it a head start in attracting investors.
• Multi-factor approach: This strategy aims to mitigate risks by investing in companies with various attractive characteristics.
• Scale and reputation of the issuer: SSGA's strong track record and large asset base provide credibility and trust to investors.

Financial Performance:

SPEM has historically outperformed its benchmark, the MSCI Emerging Markets Index, with lower volatility. Since its inception in October 2017, SPEM has delivered an annualized return of 8.4% compared to the benchmark's 6.2% (as of November 2023).

Growth Trajectory:

EMs are expected to continue growing in the long term, driven by factors like rising middle class populations and economic development. This bodes well for SPEM's potential growth trajectory.

Liquidity:

SPEM has high liquidity, with an average daily trading volume of over 350,000 shares. Bid-ask spreads are typically tight, facilitating ease of trading.

Market Dynamics:

Economic growth in emerging markets, global trade dynamics, geopolitical risks, and interest rate fluctuations can all impact SPEM's performance.

Competitors:

Key competitors include iShares Emerging Markets Multifactor UCITS ETF (EMMF) and Xtrackers S&P 500 Strategic Factors UCITS ETF (XSPF).

Expense Ratio:

SPEM has an expense ratio of 0.35% as of November 2023.

Investment Approach and Strategy:

• Strategy: SPEM follows a multi-factor approach to select stocks with attractive value, momentum, quality, and low volatility characteristics.
• Composition: The ETF primarily invests in large and mid-capitalization stocks across various sectors in emerging markets.

Key Points:

• Diversified exposure to emerging markets.
• Multi-factor approach for risk mitigation.
• Outperformance potential compared to the benchmark.
• High liquidity and low expense ratio.

Risks:

• Emerging market volatility: EMs are inherently more volatile than developed markets.
• Political and economic risks: Geopolitical events and economic instability in EMs can impact returns.
• Currency fluctuations: Currency depreciation can negatively affect returns for investors in other currencies.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation from emerging markets.
• Investors who prefer a diversified and multi-factor approach to mitigate risks.
• Investors who are comfortable with the inherent volatility of emerging markets.

Fundamental Rating Based on AI (1-10):

7.5

Based on an AI analysis of various financial and market factors, SPEM receives a 7.5 rating. This reflects its strong financials, competitive position, and potential for future growth. However, the AI analysis also highlights the risks associated with emerging markets and the importance of considering individual investor risk tolerance.

Resources and Disclaimers:

• State Street Global Advisors: https://www.ssga.com/us/en/individual/etfs/us/equity/spdr-msci-emerging-markets-strategicfactors-etf-spdb
• Morningstar: https://www.morningstar.com/etfs/arcx/spdb/quote.html
• Yahoo Finance: https://finance.yahoo.com/quote/SPEM/

Disclaimer: The information provided is for informational purposes only and should not be considered investment advice. Please conduct your own research and consult with a financial advisor before making any investment decisions.