Trading begins today in a new lineup of State Street Corp. funds, known as index shares, that are linked to the performance of large companies in nine industry sectors.
The Select Sector SPDR (pronounced "spider") Funds will trade on the American Stock Exchange as part of its Index Share Marketplace, the Boston banking company said. The funds are a new twist on the Standard & Poor's Depositary Receipts index shares.
Unlike mutual funds, which are bought at a net asset value based on the prior day's close, index shares and options on them are traded intraday.
State Street's offerings invest in S&P 500 companies picked by Merrill Lynch & Co. in basic industries, consumer services, consumer staples, cyclical/transportation, energy, financial, industrial, technology, and utilities. "Money managers and institutions attempting to beat the S&P 500 can at least replicate or place their bets by going long or short shares," said Kathleen C. Cuocolo, a senior vice president of State Street.