State Street offers distinct ETFs for S&P 500, Dow, Nasdaq

State Street expanded its ETF lineup to offer separate funds that track the S&P 500, the Dow Jones Industrial Average and the Nasdaq-100. The group consists of SPY, SPYM, DIA and the recently launched QNDX. State Street is the first ETF manager to provide distinct products for all three major U.S. benchmarks.

SPY, the longtime SPDR S&P 500 ETF, carries a 9-basis-point expense ratio and operates as a Unit Investment Trust, which prevents the fund from directly reinvesting cash dividends. The fund’s size supports high trading volume, tight bid-ask spreads and an active options market.

SPYM, the State Street SPDR Portfolio S&P 500 ETF, is structured as an open-ended fund and allows dividend reinvestment. It charges 2 basis points in fees and is positioned for investors focused on minimizing costs over a longer holding period. Anna Paglia, executive vice president at State Street Investment Management, noted that SPY remains the most traded security while SPYM has grown quickly because of its low fees and S&P 500 exposure.

The State Street SPDR Dow Jones Industrial Average ETF Trust (DIA) provides concentrated exposure to the 30 companies that make up the DJIA. Those constituents are chosen by a committee that includes representatives from the index provider. The DJIA is price-weighted, so companies with higher share prices have greater influence on the index than those with lower share prices, regardless of market capitalization.

In June, State Street launched the State Street SPDR Portfolio Nasdaq 100 ETF (QNDX) to track the Nasdaq-100 Index. QNDX holds the 100 largest non-financial companies listed on Nasdaq and is heavily concentrated in technology and consumer discretionary sectors, which together account for more than 80% of the fund’s holdings. The fund began with a 10-basis-point expense ratio, eight basis points below Invesco QQQ and five basis points below Invesco QQQM. State Street reported daily inflows on all but one trading day since the fund’s debut.

Todd Rosenbluth, head of research at TMX VettaFi, observed that funds tracking the same index can differ in structure and management and that those differences can affect investor outcomes.

The four ETFs offer different mixes of cost, liquidity and structure: SPY for highly traded exposure and options liquidity; SPYM for lower fees and dividend reinvestment; DIA for price-weighted exposure to 30 large U.S. companies; and QNDX for lower-cost access to the Nasdaq-100.