State Street Drops Price On 2 Bond ETFs

The 0.03% price makes SPAB and SPBO cheaper than competing funds.

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Reviewed by: Dan Mika
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Edited by: Dan Mika

State Street Global Advisors is cutting the expense ratios on the SPDR Portfolio Aggregate Bond ETF (SPAB) and the SPDR Portfolio Corporate Bond ETF (SPBO) to 0.03% each, aiming to undercut its competition in the vanilla bond segment.

The price changes effective Tuesday drop SPBO’s costs by 3 basis points, while SPAB will drop by 1 basis point.

Sue Thompson, head of SDPR Americas distribution for State Street, told ETF.com in an emailed statement that the firm decided to cut costs to investors in its core “Portfolio” group of funds after they accumulated more than $16 billion in inflows year-to-date.

“Coinciding with this growth, we’ve found additional opportunities to reduce the total cost of ownership for investors,” she said.

Competing On Price

State Street’s price reduction appears to be an attempt to take market share from larger bond funds run by BlackRock and Vanguard.

SPBO has $346 million in assets under management compared to the Vanguard Total Corporate Bond ETF (VTC) and the iShares Broad USD Investment Grade Corporate Bond ETF (USIG), which have respective assets of $715.3 million and $5.9 billion and charge 0.05% and 0.04% in expense ratios.

In the combined government/corporate bond segment, SPAB comes in 1 basis point less than the iShares Core U.S. Aggregate Bond ETF (AGG), the Vanguard Total Bond Market ETF (BND) and the Schwab U.S. Aggregate Bond ETF (SCHZ).

However, SPAB’s assets are less than a tenth of AGG and BND’s size:

 

TickerFundIssuerExpense RatioAUM
AGGiShares Core U.S. Aggregate Bond ETFBlackRock0.04%$88.36B
BNDVanguard Total Bond Market ETFVanguard0.04%$78.22B
SCHZSchwab U.S. Aggregate Bond ETFCharles Schwab0.04%$8.93B
SPABSPDR Portfolio Aggregate Bond ETFState Street Global Advisors0.04%$6.07B
FLCBFranklin Liberty U.S. Core Bond ETFFranklin Templeton0.15%$1.62B
EAGGiShares ESG Aware U.S. Aggregate Bond ETFBlackRock0.10%$1.33B
JAGGJPMorgan U.S. Aggregate Bond ETFJPMorgan Chase0.07%$1.11B
AGGYWisdomTree Yield Enhanced U.S. Aggregate Bond FundWisdomTree0.12%$1.06B
NUBDNuveen ESG U.S. Aggregate Bond ETFNuveen Securities0.20%$254.16M
FLDRFidelity Low Duration Bond Factor ETFFidelity0.15%$236.33M

 

State Street’s moves also bring the two ETFs in line with newer fixed income funds. Out of the 21 funds that launched this year, nine have expense ratios between 0.03% and 0.04%, and six other funds charge below the 0.03% threshold.

Contact Dan Mika at [email protected], and follow him on Twitter.

Dan Mika is a reporter for etf.com. He has previously covered business for the Ames Tribune and Cedar Rapids Gazette in Iowa, and BizWest Media in Fort Collins, Colorado. Dan holds a bachelor's degree in journalism from Truman State University.