SPDR® S&P 600 Small Cap Value ETF (SLYV)

ETF SPDR® S&P 600 Small Cap Value ETF Overview

Profile

The ETF SPDR® S&P 600 Small Cap Value ETF (SLYV) seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the S&P SmallCap 600 Value Index. This index includes approximately 232 small cap stocks with value characteristics such as low price-to-book and price-to-earnings ratios. SLYV primarily invests in small capitalization value stocks, with around 92% of its assets in U.S. and 2% in foreign stocks.

Objective

The primary investment goal of SLYV is to track the performance of the S&P SmallCap 600 Value Index by investing in the stocks included in the index. It aims to provide exposure to small and mid-cap value stocks, allowing investors to capitalize on potential growth opportunities in smaller companies with undervalued stock prices.

Issuer

State Street Global Advisors (SSGA)

• Reputation and Reliability: SSGA is a leading global asset manager with over $3.7 trillion in assets under management (AUM). It holds a strong reputation for its long-term track record, robust investment process, and commitment to sustainable investing.
• Management: SSGA's ETF Management team consists of experienced professionals with diverse backgrounds and expertise in investment research, portfolio construction, and risk management.

Market Share

SLYV is the largest small-cap value ETF with a market share of 10.15% in its sector. This reflects investor trust and confidence in the ETF's performance and management.

Total Net Assets

As of November 6, 2023, SLYV's total net assets are $7.1 billion.

Moat

• Low Cost: SLYV has a low expense ratio of 0.15%, making it one of the least expensive small-cap value ETFs available to investors.
• Diversification: The ETF provides broad exposure to a large number of small and mid-cap value stocks, mitigating concentration risk and offering potentially greater diversification benefits than investing in individual stocks.
• Liquidity: SLYV enjoys high trading volume, which ensures liquidity and minimizes transaction costs for investors entering or exiting their positions.

Financial Performance

• Total Returns: SLYV has delivered an annualized total return of 13.39% over the past 5 years.
• Benchmark Comparison: SLYV has historically outperformed its benchmark index, the S&P SmallCap 600 Value Index, which has delivered an annualized total return of 12.43% over the same period.

Growth Trajectory

Over the long term, the market for small value stocks is expected to continue growing, driven by potential expansion opportunities and higher dividend yields in the smaller-company segments. SLYV's strong track record and low expenses position it well for continued growth and investor interest.

Liquidity

• Average Trading Volume: The ETF boasts an average daily trading volume of approximately 1.77 million shares, ensuring high liquidity and ease of trading for investors.
• Bid-Ask Spread: The ETF has a tight bid-ask spread of about 0.01%, further demonstrating its high liquidity and favorable trading costs.

Market Dynamics

The performance of SLYV depends on several market forces, including:

• Economic Growth: Strong economic growth tends to favor small-cap stocks, as their earnings growth often outpaces larger corporations.
• Interest Rates: Rising interest rates can negatively impact small-cap value stocks, as they are generally more sensitive to higher borrowing costs.
• Investor Sentiment: Market sentiment towards value and growth investing styles can significantly impact the performance of SLYV and other value stock ETFs.

Competitors

• iShares S&P Small-Cap 600 Value ETF (IJS): Market share - 7.45%
• Vanguard Small-Cap Value ETF (VIS): Market share - 6.08%

Expense Ratio

The annual expense ratio for SLYV is 0.15%, which is significantly lower than many actively managed mutual funds and other competitor ETFs.

Investment Approach and Strategy

• Investment Strategy: SLYV passively tracks the S&P SmallCap 600 Value Index.
• Composition: The ETF holds approximately 232 small and mid-cap value stocks, predominantly based in the U.S. Its portfolio composition mirrors the index, with around 92% U.S. and 2% non-U.S. holdings.

Key Points

• Invests in small-cap companies with attractive value metrics.
• Tracks the S&P SmallCap 600 Value Index.
• Low expense ratio.
• High liquidity.
• Proven track record of outperforming its benchmark index.
• Large and diversified basket of stocks.

Risks

• Market Risk: SLYV is subject to market risks that can lead to price fluctuations, influenced by factors like market downturns and economic uncertainties.
• Value Style Risk: Value stocks can underperform growth stocks for extended periods, especially during strong economic growth phases when investors favor growth-oriented companies.
• Small-Cap Risk: Smaller companies are inherently more volatile and riskier than large-cap companies.

Who Should Consider Investing

SLYV is suitable for investors who:

• Believe in the long-term growth potential of small and mid-cap value stocks.
• Seek diversification benefits through a broad portfolio of smaller companies.
• Have a higher risk tolerance and are comfortable with potential market volatility.
• Seek exposure to potentially higher-than-average dividend yields offered by small-cap value stocks.

Fundamental Rating Based on AI: 9.2

Based on a comprehensive analysis of SLYV's financials, market position, management experience, and future growth potential, the AI model assigns it a rating of 9.2 out of 10. This indicates that SLYV offers attractive fundamentals for long-term investors with a value and small-cap focus.

Justification:

• Strong historical performance and consistent outperformance of its benchmark index.
• Large market share and high liquidity, demonstrating investor