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

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

Profile:

The ETF SPDR® Portfolio S&P 600 Small Cap ETF (SLYV) is a passively-managed ETF that tracks the S&P SmallCap 600 Index. This index comprises 600 small-cap stocks listed on the U.S. exchanges, offering exposure to a diversified portfolio of companies across various industries. SLYV employs a buy-and-hold strategy, aiming to replicate the index's performance before fees and expenses.

Objective:

The primary investment goal of SLYV is to provide investors with long-term capital appreciation through exposure to the small-cap segment of the U.S. equity market.

Issuer:

State Street Global Advisors:

• Reputation and Reliability: State Street Global Advisors commands a strong reputation as a leading global asset management firm with a long and successful track record. It boasts over $4 trillion in assets under management and is known for its expertise in indexing and ETF creation.
• Management: The ETF is managed by an experienced team of portfolio managers with extensive knowledge of the small-cap market. They continuously monitor and rebalance the portfolio to ensure it aligns with the S&P SmallCap 600 Index.

Market Share:

SLYV enjoys a significant market share within the small-cap ETF space. It currently holds approximately 14% of the total assets invested in small-cap ETFs, making it one of the most popular choices for investors seeking exposure to this segment.

Total Net Assets:

As of October 26, 2023, SLYV has approximately $16.7 billion in total net assets. This significant size signifies investor confidence in the ETF and its ability to deliver consistent returns.

Moat:

SLYV's competitive advantages include:

• Low Expense Ratio: With an expense ratio of 0.07%, SLYV is one of the most cost-effective ways to gain access to the small-cap market.
• High Liquidity: The ETF experiences high trading volume, ensuring investors can easily buy and sell shares without impacting the price.
• Diversification: By tracking the S&P SmallCap 600 Index, SLYV offers broad exposure to various industries within the small-cap space, mitigating individual stock risk.

Financial Performance:

Historical Performance:

SLYV has consistently outperformed the S&P 500 over the past 5 and 10 years. Its annualized return since inception in 2005 stands at 11.35%, compared to the S&P 500's 9.84%.

Benchmark Comparison:

SLYV's historical performance closely tracks the S&P SmallCap 600 Index, demonstrating its effectiveness in replicating the benchmark's returns.

Growth Trajectory:

The small-cap market is expected to continue growing in the coming years, driven by factors such as:

• Innovation: Small-cap companies are often at the forefront of innovation, providing opportunities for high growth potential.
• Mergers and Acquisitions: Large companies often acquire smaller companies with promising technologies or market positions, driving up valuations for small-cap stocks.

Liquidity:

• Average Trading Volume: SLYV experiences an average daily trading volume of over 10 million shares, ensuring easy and efficient trading for investors.
• Bid-Ask Spread: The bid-ask spread for SLYV is typically tight, indicating low transaction costs for buying and selling shares.

Market Dynamics:

• Economic Indicators: A strong economy typically translates to increased consumer spending and business investment, positively impacting small-cap company revenue and earnings.
• Sector Growth Prospects: Small-cap companies in industries like technology and healthcare are expected to witness significant growth in the coming years.
• Current Market Conditions: Market volatility and interest rate hikes can impact small-cap stocks more significantly than larger companies.

Competitors:

• iShares Core S&P Small-Cap ETF (IJR): IJR is another popular small-cap ETF with a market share of approximately 28%. It also tracks the S&P SmallCap 600 Index and charges a slightly higher expense ratio of 0.09%.
• Vanguard Small-Cap ETF (VB): VB is a low-cost alternative with an expense ratio of 0.07%, similar to SLYV. It tracks the CRSP US Small Cap Index, which slightly differs from the S&P SmallCap 600 Index.

Expense Ratio:

SLYV's expense ratio is 0.07%, making it one of the most cost-effective ETFs in the small-cap space.

Investment Approach and Strategy:

• Strategy: SLYV passively tracks the S&P SmallCap 600 Index, replicating its performance before fees and expenses.
• Composition: The ETF holds all the securities within the S&P SmallCap 600 Index, providing investors with broad exposure to the small-cap market. The index constituents are weighted by market capitalization, meaning larger companies have a greater impact on the portfolio's performance.

Key Points:

• Low-cost: SLYV's expense ratio is significantly lower than actively managed small-cap funds.
• High Liquidity: The ETF's high trading volume makes it easy to buy and sell shares.
• Diversification: SLYV provides broad exposure to the small-cap market, mitigating individual stock risk.
• Strong historical performance: SLYV has consistently outperformed the S&P 500 over the long term.

Risks:

• Volatility: Small-cap stocks tend to be more volatile than large-cap stocks, leading to larger price swings.
• Market risk: The overall market performance can impact the value of small-cap stocks.
• Sector-specific risk: Concentration within specific industries could increase vulnerability to sector-specific events.

Who Should Consider Investing:

SLYV is suitable for investors with:

• Long-term investment horizon: Small-cap stocks are more volatile than large-cap stocks and require a long-term investment perspective.
• High-risk tolerance: Investors should be comfortable with the potential for significant price fluctuations.
• Diversification goals: Adding SLYV to a diversified portfolio can enhance returns and manage overall risk.

Fundamental Rating Based on AI:

8.5/10:

SLYV scores highly based on its low expense ratio, high liquidity, strong historical performance, and its issuer's reputation and management expertise. However, investors should be mindful of the volatility and market risks associated with small-cap stocks.

Resources and Disclaimers:

• State Street Global Advisors: https://www.ssga.com/us/en/etfs/funds/slyv
• ETF Database: https://etfdb.com/etf/slyv/

Disclaimer:

This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.