State Street Corp. has launched its first three exchange-traded funds focusing on financial services companies. /P>The streetTRACKS banking, insurance, and capital markets funds track three Keefe, Bruyette & Woods Inc. indexes.
Greg Ehret, a co-head of State Street Global Advisors’ adviser strategies group, said Tuesday that the funds are a response to demand from advisers. The Boston company was getting “a lot of feedback from the advisory community that wanted to slice and dice” the financial services sector, he said at a press conference at the American Stock Exchange.
Thomas B. Michaud, Keefe Bruyette’s chief operating officer, said there had been “no adequate representation for breaking financial services into component parts.” Financial services stocks “respond very different to market events,” he said.
Keefe Bruyette has built the funds on three of its five indexes — of midcap and large-cap banks, insurance firms, and the capital markets companies. (Its two other indexes are a regional banking index, composed of 50 smaller companies, and a mortgage finance index.)
Each index includes shares of no more than 24 companies, each weighted from 8% to 12.5% of the index. Each company must have been public for at least a year and must trade at no less than $10 per share at average daily volume of at least 50,000 shares.
Mr. Michaud said the companies in the KBW bank index represent a “survival of the fittest” of the national money-center banks and regional institutions. “The players in this index are going to be the acquirers,” he said.
State Street also launched six other exchange-traded funds Tuesday. The SPDR Dividend ETF tracks the S&P High Yield Dividend Aristocrats index, which includes the 50 highest-yielding companies of the S&P 1,500 that have increased their dividends in each of the last 25 years. The five others are style-based funds — large cap, midcap, midcap growth, midcap value, and small cap — and track the Dow Jones Wilshire indexes.
State Street Global Advisors offers 29 U.S. equity-based exchange-traded funds, including those introduced Tuesday. All are listed on the American exchange. The company has $1.4 trillion of assets under management.
