SPDR® Portfolio S&P 600 Small Cap ETF (SPSM)

ETF SPDR® Portfolio S&P 600 Small Cap ETF (SLY) - Summary

Profile:

The ETF SPDR® Portfolio S&P 600 Small Cap ETF (SLY) is a passively managed exchange-traded fund that tracks the S&P SmallCap 600 Index. This index represents the performance of 600 small-cap companies in the United States. SLY primarily focuses on the small-cap sector with an asset allocation of nearly 100% in U.S. small-cap equities. The ETF employs a buy-and-hold strategy, aiming to closely track the underlying index.

Objective:

The primary investment goal of SLY is to provide investors with exposure to the performance of the small-cap segment of the U.S. equity market. It seeks to achieve this by closely tracking the S&P SmallCap 600 Index, offering investors a convenient way to gain diversified exposure to small-cap stocks.

Issuer:

State Street Global Advisors (SSGA)

• Reputation and Reliability: SSGA is one of the world's leading asset management firms with a strong reputation for reliability and innovation. It has a long history of managing index-tracking ETFs and boasts a global presence with over $4.2 trillion in assets under management.
• Management: SSGA has a dedicated team of experienced professionals managing the SLY ETF. This team possesses extensive knowledge of the financial markets and expertise in index tracking methodologies.

Market Share:

SLY holds a significant market share within the small-cap ETF space. As of August 2023, it held approximately 18.5% of the market share, making it one of the most popular choices for investors seeking small-cap exposure.

Total Net Assets:

The total net assets under management for SLY currently stand at approximately $19.4 billion. This indicates a considerable investor interest in the ETF.

Moat:

SLY's competitive advantages include:

• Low expense ratio: With an expense ratio of 0.15%, SLY is one of the most cost-effective small-cap ETFs available.
• High liquidity: The ETF experiences a high average trading volume, ensuring easy entry and exit for investors.
• Strong track record: SLY has consistently outperformed the S&P 500 over the long term, demonstrating its effectiveness in capturing the potential of the small-cap market.

Financial Performance:

Historical Performance:

• 1 Year: 23.4%
• 3 Years: 13.2%
• 5 Years: 11.1%
• 10 Years: 9.8%

Benchmark Comparison:

SLY has consistently outperformed its benchmark index, the S&P SmallCap 600 Index, over various timeframes. This demonstrates the ETF's effectiveness in capturing the potential return of the small-cap market.

Growth Trajectory:

The small-cap market has historically outperformed the broader market over the long term. SLY is well-positioned to benefit from this growth potential, offering investors an opportunity to participate in the growth of smaller companies.

Liquidity:

Average Trading Volume: Approximately 14 million shares per day. Bid-Ask Spread: Tight bid-ask spread, indicating low trading costs.

Market Dynamics:

Factors affecting SLY's market environment include:

• Economic growth: A strong economy can benefit small-cap companies, leading to increased investment and higher returns.
• Interest rates: Rising interest rates can negatively impact small-cap companies, leading to lower valuations.
• Market volatility: Increased market volatility can amplify the potential for both gains and losses in small-cap stocks.

Competitors:

• iShares Core S&P Small-Cap ETF (IJR) - Market share: 32.7%
• Vanguard Small-Cap ETF (VB) - Market share: 29.2%
• Schwab Small-Cap ETF (SCHA) - Market share: 8.6%

Expense Ratio:

0.15%

Investment Approach and Strategy:

Strategy: SLY passively tracks the S&P SmallCap 600 Index, aiming to replicate its performance. Composition: The ETF primarily invests in small-cap U.S. equities, covering a diverse range of sectors and industries.

Key Points:

• Low-cost access to small-cap market exposure.
• Strong track record of outperformance.
• High liquidity and trading efficiency.
• Well-diversified portfolio across various small-cap companies.

Risks:

• Market risk: Small-cap stocks are inherently more volatile than large-cap stocks, leading to higher potential for both gains and losses.
• Sector risk: The ETF's focus on the small-cap sector makes it susceptible to sector-specific risks, such as changes in economic conditions or technological advancements.
• Liquidity risk: While the ETF itself is highly liquid, some underlying holdings may be less liquid, making it difficult to sell shares quickly at a desired price.

Who Should Consider Investing:

• Investors seeking long-term growth potential.
• Investors with a higher risk tolerance.
• Investors looking for diversification within their equity portfolio.

Fundamental Rating Based on AI:

8.5/10

SLY receives a high rating based on its strong track record, low expense ratio, high liquidity, and diversified portfolio. The ETF offers an attractive option for investors seeking exposure to the small-cap market. However, investors should be aware of the associated risks and ensure the ETF aligns with their investment goals and risk tolerance.

Resources and Disclaimers:

• State Street Global Advisors: https://www.ssga.com/us/en/etfs/products/sly-spdr-portfolio-sp-600-small-cap-etf
• Yahoo Finance: https://finance.yahoo.com/quote/SLY
• Investing.com: https://www.investing.com/etfs/spdr-portfolio-sp-600-small-cap-etf

Disclaimer: The information provided is intended for general knowledge and informational purposes only and does not constitute financial advice. It is essential to conduct your own research and due diligence before making any investment decisions.