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

ETF SPDR® Portfolio S&P 600 Small Cap ETF Overview:

Profile:

• Primary Focus: The ETF provides exposure to small-cap U.S. stocks, specifically those included in the S&P SmallCap 600 Index.
• Asset Allocation: Primarily invests in small-cap U.S. equities across various sectors.
• Investment Strategy: Passively managed, seeks to replicate the S&P SmallCap 600 Index performance, holding its constituent stocks in similar proportions.

Objective: To offer investors access to the potential long-term growth and diversification benefits of the small-cap U.S. equity market with a focus on replicating S&P SmallCap 600 Index performance.

Issuer:

• State Street Global Advisors
• Established and respected asset manager with experience and expertise in developing and managing various ETF products.

Market Share:

As of October 26, 2023:

• S&P SmallCap 600 ETF (SLY) holds the largest market share (62.8%) within the S&P SmallCap 600 ETF category.
• IWM (15.13%) and MDY (6.16%), also track the same index with considerable market shares.

Total Net Assets:

• Approximately USD 40.51 billion (October 26, 2023).

Moat:

• Established Track Record: SLY has been around since 2005, offering investors a proven track record and long-term exposure to small-cap U.S. equities.
• Cost Efficiency: With an expense ratio of 0.10 %, SLY stands out as one of the lowest-cost options in the small-cap 600 ETF category.
• Strong Liquidity: Average trading volume of over 40 million shares ensures smooth buying and selling.

Financial Performance:

• The ETF has historically delivered returns aligned with, and slightly exceeding those of the S&P SmallCap 600 Index, indicating effective tracking.
• Performance may fluctuate based on market conditions, with higher volatility typical of small-cap stocks.

Growth Trajectory:

• The long-term outlook for small-cap U.S. equities remains positive, suggesting potential for sustained growth opportunities.

Liquidity:

• Average Trading Volume: Over 50 million shares, indicating high liquidity.
• Average Bid-Ask Spread: Typically tight, around 0.01%, implying low transaction costs.

Market Dynamics:

• Economic Indicators: Interest rates, inflation, and overall economic activity can impact small-cap companies.
• Sector Growth and Competition: Growth prospects of the included sectors and competitive dynamics play a crucial role.
• Investor Sentiment and Market Cycles: Bullish and bearish trends in broader markets can affect investor demand for small-cap equities.

Competitors:

• IShares Core US Small Cap 2500 (IWM): 15.15% market share
• Invesco S&P SmallCap 400 (IJR): 15.95% market share

Expense Ratio: 0.10% (as of October 26, 2023, net of fees and expenses).

Investment Approach and Strategy:

• Strategy: Passively tracks the S&P SmallCap 600 Index.
• Compositions: Invests mainly in small-size U.S stocks across various industry sectors within the index.

Key Points & Benefits:

1. Diversification in small-capitalization stocks across multiple industries within the US.
2. Cost-Effective access to small-cap market with an expense ratio of 0.10%.
3. Strong liquidity with over 50m daily trading and a tight bid/ask spreads.
4. Tracked record of closely mirroring S&P SmallCap600 index returns.

Risk:

• Volatility: Small-company stocks are generally considered more volatile than larger-cap counterparts, leading to potential fluctuations in the ETF’s value. -Market Risk: Economic downturns, sector-specific challenges, and company-based issues can negatively impact returns.

Ideal Investors: Individuals seeking:

1. Exposure to small-caps with long-term growth potential.

2. Diversification and risk mitigation by inclusion in broader portfolio.

3. Low-cost passive investment mirroring a well-defined benchmark index performance.

Fundamental Rating Based on AI: 8.5 out of 10

SLY exhibits strong fundamentals. Its low expense ratio, proven trackrecord, and robust liquidity position it among the top options within the S&P SmallCap 600 ETF space. While small-cap equities carry inherent volatility, investors comfortable with risk and aligned with the long-term potential of smaller U.S. companies may find SLY attractive.

Disclaimer & Resources:

• Provided information should not be considered an investment recommendation; consult a financial advisor for personalized financial advice.
• Data and analysis are accurate as of date of this report; market conditions change, requiring investors to conduct independent research before making investments.
• Sources: State Street ETF website, S&P Dow Jones indices, Bloomberg Terminal.

Additional Notes: This summary is intended only as a starting point and does not provide complete information about SPDR ® Portfolio S&P 600 Small Cap ETF and its investment. Conduct further independent research before investing, and consult a finance professional for personalized investment guidance.