In a previous installment of our educational blog series on investment strategies and asset classes – The unique advantages of dividends – we discussed why and how WisdomTree weights by dividends.
It is worth noting that dividends not only provide the potential for downside protection, but also provide the potential for a growing stream of income.
Companies are paying larger dividends than ever
Today, more companies are paying dividends—and in larger amounts than ever before. In fact, many companies actually increase their dividends over time, providing a potentially growing stream of income that makes them an attractive investment option for investors of all ages.
For example, the Dividend Stream , the sum of all dividends being paid has been growing—with the total global dividend stream now at nearly $1.5 trillion!
Figure 1: WisdomTree’s global dividend stream
Sources: WisdomTree, Standard & Poor’s, Factset. Data represents the constituents of the WisdomTree Global Dividend Index, measured as of each annual rebalance screening. You cannot invest directly within an Index. Historical performance is not an indication of future performance and any investments may go down in value.
Global breakdown of dividends by region
Another interesting aspect of the global dividend landscape regards where the dividends, regionally, are coming from. Figure 2 allows us to draw a few key conclusions:
1. The world’s largest dividend-paying regions on a dividend stream basis are the United States and Europe.
2. The United States is interesting, in that it has the largest dividend stream out of the regions shown, but only 76.7% of the market capitalization of the MSCI USA IMI Index was in stocks that had paid at least one dividend over the past 12 months, as of 30 September 2018. The MSCI Europe IMI Index showed 97.0% of Index weight in stocks that had paid at least one dividend over the 12-months prior to 30 September 2018, a large difference.
Figure 2: Breakdown of the global dividend stream by region
Sources: WisdomTree, Factset, Standard & Poor’s. Data is measured as of the WisdomTree 30 September 2018 Global Dividend Index data screening. Asia Pacific refers to developed market countries in the Asia Pacific region, Japan, Hong Kong, Australia, Singapore and New Zealand. Emerging Asia Pacific refers to China, India, Indonesia, Malaysia, Philippines, South Korea, Taiwan and Thailand. For the % of Global Market Cap in Dividend Payers which comes from the MSCI ACWI IMI Index in this case, Pakistan is also included, but it is not an eligible country within WisdomTree’s Global Dividend Index. Canada, Emerging Europe, Emerging Latin America, Europe, Israel, the United States and Global refer to the MSCI Canada IMI, MSCI Emerging Europe, MSCI Emerging Latin America, MSCI Europe IMI, MSCI Israel IMI, MSCI United States IMI, and MSCI ACWI IMI Indices for the % of Global Market Cap in Dividend Payers.
This measure is calculated as the percent weight in firms that paid at least 1 dividend over the prior 12-months, as of 30th September 2018. You cannot invest directly within an Index. Historical performance is not an indication of future performance and any investments may go down in value.
Dividends as a guide to global equity allocations
Dividends are also becoming quite prolific. Small, medium and large companies all over the world offer dividends. We spend a lot of time helping investors think about a global equity allocation.
Market capitalization—the starting point
Investors today are extremely familiar with the allocations that come from market capitalization-weighting. US equities receive nearly 55% of the exposure, followed by developed world excluding US at 34.4% and emerging markets at nearly 11%, as illustrated on figure 3a. Now, many people also cite that the US equity market has been among the world’s strongest exposure for an extended period, looking back to the Global Financial Crisis of 2008-09.
Dividend stream weighting—a method sensitive to relative valuation
Instead of allowing the share price multiplied by the number of shares outstanding to dictate exposure, investors might consider allowing the dividend per share multiplied by the number of shares outstanding to drive the result. As we mentioned earlier, WisdomTree calls this term the dividend stream. This would shift weight from the US towards both the Developed World ex-US and to the Emerging Markets. Yes, such an approach would have underperformed over the past 10 years, but on a forward-looking basis, it creates an interesting, differentiated starting point.
Figure 3a: The world broken down by market capitalization weighted exposure
Source: Bloomberg, with data measured for the MSCI ACWI IMI Index as of 30 September 2018. You cannot invest directly within an Index. Historical performance is not an indication of future performance and any investments may go down in value.
Figure 3b: The world broken down by dividend stream weighted exposure
Sources: WisdomTree, Factset, Standard & Poor’s, with data measured as of the 30 September 2018 WisdomTree Global Dividend Index Screening. You cannot invest directly within an Index. Historical performance is not an indication of future performance and any investments may go down in value.
WisdomTree weights by dividends to potentially magnify the impact of dividends on performance. In addition, we conduct an annual rebalance back to relative value in order to manage valuation risk. This process is designed to help portfolios generate more income than their market cap-weighted counterparts.
This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
Revenue analysis underlines need for small cap diversification
Fears at the prospect of a global trade war has caused huge volatility in equity markets in 2018; yet for those looking to maintain long-term allocations to equities, there are segments of the equity market that tend to be less affected by the current issues.
Small cap stocks in particular, many of which tend to be less global and more domestically-focused, generally export less than their large cap peers on a regional basis, which can provide some protection for future revenue streams.
Local revenue vs global revenue for small cap companies on a regional basis
Analysis shows that European small caps generate almost twice the weighted average revenue from within Europe as companies within the large cap focused MSCI Europe Index. This suggests that if investors have a desire to allocate to Europe but wish to invest in non-exporters, one approach is to focus on small cap equities. It’s also important to make the connection to currency performance, as export-oriented firms tend to benefit when their home currency weakens, and their goods and services become less expensive in their targeted markets abroad. Over the last 12 months1, the euro appreciated 16.2% against the U.S. dollar and the British pound appreciated 13.9% against the U.S. dollar.
Looking at other regions there are distinct differences. In Japan, small caps derive more than 80% of their weighted average revenue inside Japan. Emerging markets meanwhile exhibit the smallest difference when comparing the weighted average revenue distribution of smaller companies to larger companies.
U.S. small caps were in focus after President Trump’s 2016 election victory, as it was assumed that a Republican victory would result in corporate tax reform. U.S. small caps do derive a higher proportion of revenues from inside the U.S. than larger caps and therefore have greater potential for earnings growth now that corporate tax rates have been lowered.
For investors considering portfolio exposure and asset allocation to small cap equities, it is crucial to understand geographical revenue differences when considering which strategy may be most appropriate. Furthermore, deeper analysis shows that regional small caps indices also deliver distinctly different performance.
Small cap performance on a regional basis
The chart above shows that small cap stocks have underperformed in the U.S. over several time horizons but outperformed in Europe, Japan and the emerging markets. The U.S. comparison clearly exhibits a distinct difference to the other global regions shown, in that small caps underperformed large caps over each period.
On a one-year basis, the comparison was particularly challenging. A key contributor to this is that many global currencies have strengthened significantly against the U.S. dollar over the past year. This has created a tailwind for U.S. large cap multinational exporters, but since small cap companies don’t export to the the same extent, it has not impacted them to an equivalent degree.
Additionally, the strong performance of large cap U.S. equities exhibiting sensitivity to momentum as a factor, leading the industry and media to create acronyms like F-A-N-G (Facebook-Amazon-Netflix-Google) has also contributed to the large cap performance advantage.
Allocation to small cap equities can provide much-needed diversification for investors; but when considering portfolio exposure and asset allocation, it is important investors understand and consider geographical differences between performance and revenue streams.
Source: Bloomberg. Data is as of 31 Mar. 2018. Past performance is not indicative of future results. You cannot invest directly in an Index. USA refers to the difference in average annual returns of the WisdomTreeU.S. SmallCap Dividend Index and the S&P 500 Index. Europe refers to the difference in average annual returns of the WisdomTree Europe SmallCap Dividend Index and the MSCI Europe Index, with returns measured in euro terms. Emerging Markets refers to the difference in average annual returns between the WisdomTree Emerging Markets SmallCap Dividend Index and the MSCI Emerging Markets Index. Japan refers to the difference in average annual returns between the WisdomTree Japan SmallCap Dividend Index and the MSCI Japan Index.
ETF Securities Portfolio Insights: Key considerations in choosing a commodity index
Highlights
The composition of a commodity index, the liquidity of its underlying contracts and the complexity of its rolling schedule can have an impact on its performance.
Getting exposure to futures contracts further out on the curve with enhanced commodity strategies, is an easier and more efficient way to improve return than increasing the complexity of the index rolling schedule.
Adding enhanced commodity indices to a portfolio of global equities and bonds, improves the Sharpe ratio by 3% on average compared to classic commodity indices.
There are a number of factors that need to be considered when choosing a commodity index to invest in. Historical back-tested performance only presents one part of the picture. The cost of investing in an instrument, such as an Exchange Traded Product (ETP), that tracks commodity returns can vary widely depending on a number of key factors.
The index composition and weighting
The composition and weighting of a commodity index define its level of diversification. The more diversified the index is, the better the investor is protected from the downside risk when the commodity index is added to a multi-asset portfolio.
The composition of major commodity benchmarks can vary significantly as illustrated above. For example, the Bloomberg Commodity Index (BCOM) has 31% in agriculture and 28% in energy while the S&P GSCI and the Deutsche Bank Liquid Commodities Index Optimum Yield (DBLCI-OY) have more than 50% concentrated in the energy sector.
A closer look at the individual commodity level shows that 40% of the S&P GSCI index is only in oil (23% in WTI crude and 16% in Brent crude) while other commodity indices allocate a maximum of 13% to a single commodity. The weightings change marginally over time. The closer the index can get to an equal weighting, the better its level of diversification.
Modifying the composition and weighting of an index while keeping the same rolling methodology tends to increase return, by 2.3% for UBS indices and 0.9% for Deutsche Bank indices since the end of December 2015, as illustrated above.
The index rolling strategy
In this section, we analysed the performance of four commodity indices in order to assess the impact that “enhanced” rolling strategies can have on returns. All four indices are exposed to the same constituents with the same weights as BCOM but apply different rolling strategies.
The next chart shows the additional return of three different enhanced strategies compared to BCOM. The first strategy increases the index average maturity from 2 or 3 months with BCOM to 5 or 6 months with the BCOM 3 Month Forward Index (BCOMF3). Index providers tend to use this strategy to help mitigate the impact of contango (negative roll yield) on the index’s total return. This strategy improved return by 2%.
Applied to the Deutsche Bank Commodity Booster index, the optimum yield strategy is exposed to contracts that expire up to 13 months from now based on the best implied roll yield. This strategy outperforms BCOM by 2.5%. The constant maturity strategy, used by the UBS Bloomberg BCOM Constant Maturity index, rolls a small portion of its exposure every day in order to maintain its average maturity, outperforming BCOM by 2.6%.
Increasing the complexity of the rolling methodology with the optimum yield and constant maturity strategies only adds 0.5% and 0.6% extra return respectively compared to the strategy that simply increases the index average maturity.
The impact on operational costs
The number of contracts an index tracks and the frequency and complexity of the rolling schedule can have an impact not only on performance as seen previously, but also on the operational costs of replicating the index.
We here distinguish between commodity indices with a classic roll methodology: BCOM, S&P GSCI, the Rogers International Commodity Index (RICI) and the Thomson/Reuters CRB index (CRB), and commodity indices that aim to improve the classic strategy, typically called enhanced commodity indices.
The above chart shows the number of transactions in each index, defined as the number of times each constituent has to roll in a year, multiplied by the number of days during each roll. The UBS BCOM CMCI Index has the largest number of transactions as it rolls a small portion of its exposure every day to maintain each constituent’s average maturity over time. The methodology of an investable commodity index needs to be replicable. The more complex the rolling schedule is, the higher the replication costs which may lead to higher tracking errors.
The liquidity of the underlying futures contracts that the index holds is also a key factor to consider, as an illiquid contract can cause disruption in the daily pricing of the commodity index and prevent investors from purchasing or redeeming their funds when they want. The further out on the curve the exposure is, the less liquid the futures contract. The above chart shows how much an investor can buy or redeem from an instrument that tracks the index without disrupting the daily pricing of the underlying futures market.
Commodity indices in a portfolio
In this section, we compare the performance of portfolios with 50% in global equities, 40% in global bonds and 10% in commodities to a standard portfolio of 60% global equities and 40% global bonds, the benchmark, since 1998.
While enhanced commodity indices tend to perform better than classic commodity indices, adding them to a portfolio of equities and bonds improves the Sharpe ratio by just 3% on average: from 0.72 on average for portfolios with 10% in classic commodity benchmarks to 0.75 on average for portfolios with 10% in enhanced commodity indices.
For more information contact:
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com
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Largest inflows into commodity ETP baskets since May 2016
ETF Securities Weekly Flows Analysis – Largest inflows into commodity ETP baskets since May 2016
Inflows of US$58.5mn into broad commodity ETPs, marks the highest in eight months.
Equities have had a strong week with inflows of US$39m. Thematic styles such as Robotics, US small caps and cyber security all saw inflows.
Crude oil ETPs see largest outflows in six weeks as investors take profit
Signalling the broad-based interest in commodities, commodity basket ETPs see their highest inflows since May 2016. Following five years of underperformance, commodities made a come-back in 2016. We continue to see interest in diversified commodity baskets as more investors rotate toward the asset class.
Equities have had a strong week with inflows of US$39m. Thematic styles such as Robotics, US small caps and cyber security all saw inflows whilst Australian equities saw US$12.6m inflows. That came despite world equities seeing a decline in performance over the week, suggesting investors are searching for alternative investment styles as valuations rise. Investors are getting noticeably more bearish on broad equities. For example we saw US$16m inflows into short European Stoxx 50 equities and US$15m of outflows in long positions. In terms of thematics, Robotics particularly remain in favour with year-to-date inflows totalling US$50m.
The rout in precious metal that begun after the US presidential election now looks to be over, with inflows into gold of US$59.6m over the last week and US$96.6 since the beginning of the year. Recent payroll figures suggest a mixed employment picture. The FOMC implied that a March rate hike, whilst being data dependent, was unlikely, with a persistence of negative real interest rates most likely in our view.
Crude oil ETPs see largest outflows in six weeks. Outflows from long crude oil ETPs of US$42.1mn followed a 7% rally in oil prices last week as investors took profit. While OPEC is one month into its 6-month production cut, the US continues to increase production. US inventory is rising as more oil rigs come into operation every week in the in the US.
Industrial metals basket ETPs see seven consecutive weeks of inflows. Inflows into industrial metal baskets totalled US$12.9mn. Against the odds, most industrial metals continue to rise. Last week’s surprise announcement from the Philippines that it will close 23 nickel mines sent the price of the metal soaring by 8%.
Largest outflow from long Yen ETPs since September 2015. Investors appear concerned that Yen weakness is here to stay, after divesting funds in ETPs tracking long EUR/JPY positions at the fastest rate since inception(2012), totalling US$4.8mn last week. With inflation expectations rising in Europe, and as the ECB is nearing the limit of its QE activities as it is expected to taper its asset purchase programme toward year-end, the Euro should benefit.
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Funds
Austria: Investors should base their investment decision only on the relevant prospectus of the Company, the Key Investor Information Document, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association, which can be obtained free of charge upon request at the Paying and Information Agent in Austria, Erste Bank der oesterreichischen Sparkassen AG, Graben 21, A1010 Wien, Österreich and on www.etfsecurities.com. France: Any subscription for shares of the Funds will be made on the basis of the terms of the prospectus, the simplified prospectus and any supplements or addenda thereto. The Company is a UCITS governed by Irish legislation and approved by the Financial Regulator as UCITS compliant with European regulations although may not have to comply with the same rules as those applicable to a similar product approved in France. Certain of the Funds have been registered for marketing in France by the Authority Financial Markets (Autorité des Marchés Financiers) and may be distributed to investors in France. Copies of all documents (i.e. the prospectus (including any supplements or addenda thereto, the Key Investor Information Document, the latest annual reports and the memorandum of incorporation and articles of association) are available in France, free of charge, at the French Centralizing Agent, Société Générale, Securities Services, at 1-5 rue du Débarcadère, 92700 Colombes – France. Germany: The offering of the Shares of the Fund has been notified to the German Financial Services Supervisory Authority (BaFin) in accordance with section 310 of the German Investment Code (KAGB). Copies of all documents (i.e. the Key Investor Information Document (in the German language), the prospectus, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association) can be obtained free of charge upon request at the Paying and Information Agent in Germany, HSBC Trinkaus & Burkhardt AG, Königsallee 21-23, 40212 Düsseldorf and on www.etfsecurities.com. The current offering and redemption prices as well as the net asset value and possible notifications of the investors can also be requested free of charge at the same address. In Germany the Shares will be settled as co-owner shares in a Global Bearer certificate issued by Clearstream Banking AG. This type of settlement only occurs in Germany because there is no direct link between the English and German clearing and settlement systems CREST and Clearstream. For this reason the ISIN used for trading of the Shares in Germany differs from the ISIN used in other countries. Netherlands: Each Fund has been registered with the Netherlands Authority for the Financial Markets following the UCITS passport-procedure pursuant to section 2:72 of the Dutch Financial Supervision Act. United Kingdom: Each Fund is a recognised scheme under section 264 of the Financial Services and Markets Act 2000 and so the prospectus may be distributed to investors in the United Kingdom. Copies of all documents (i.e. the Key Investor Information Document, the prospectus, any supplements or addenda thereto, the latest annual reports and semi-annual reports and the memorandum of incorporation and the articles of association) are available in the United Kingdom from www.etfsecurities.com. None of the index providers of the Funds referred to herein nor their licensors make any warranty or representation whatsoever either as to the results obtained from use of the relevant indices and/or the figures at which such indices stand at any particular day or otherwise. None of the index providers shall be liable to any person for any errors or significant delays in the relevant indices nor shall be under any obligation to advise any person of any error or significant delay therein.
Exchange Traded Funds (ETFs) offer an approach to investing that combines instant diversification with trading flexibility, reduced expenses, and improved tax efficiency. Fundamentals of Exchange Traded Funds.
WHAT ARE ETFs?
An ETF is a collection of securities that tracks, and is intended to represent, the performance of a broad or specific segment of the market (e.g., US equities, small cap stocks or emerging markets).
An ETF is similar to an index mutual fund but trades like a stock throughout the day. ETFs combine the features of index mutual funds with individual securities:
Like index mutual funds, ETFs allow investors to track hundreds of domestic and international indexes, including the S&P 500® and the Dow Jones U.S. Total Stock Market IndexSM, as well as specific sectors or industries (e.g., utilities, technology, or healthcare).
Like individual stocks, ETFs give investors the flexibility to buy and sell on the major stock exchanges throughout the day, at the market price. Like stocks, investors can place stop loss and limit orders on ETFs. They can even be bought on margin and sold short, subject to your broker’s terms and conditions.
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*Morningstar. Average Prospectus Net Expense Ratio for ETFs and open end mutual funds as defined by Morningstar. Data as of 9/30/2014. Average Net Prospectus Expense Ratio for US ETFs and US Mutual Funds as defined by Morningstar.
Unlike a stock, Index ETFs and mutual funds are managed funds that follow a passive investment strategy, attempting to track the performance of an unmanaged index of securities. As a result, the Funds may hold constituent securities of the Index regardless of the current or projected performance of a specific security.
ETFs trade like a stock and will fluctuate in market value over the course of the trading day, unlike an index mutual fund. ETFs may trade at prices below or above the ETF net asset value. Buying shares of an Index ETF, similar to buying a stock, will typically involve brokerage commissions to which index mutual funds may not be subject. Frequent trading of ETFs could significantly increase commissions and other costs.
THE POTENTIAL BENEFITS OF EXCHANGE TRADED FUNDS
DIVERSIFICATION. ETFs offer one of the easiest ways to diversify a portfolio, especially for investors who want to focus on a specific sector or industry. By virtue of being index investments, ETFs offer exposure to a particular market segment, helping to protect against the risk of a select number of individual stocks hurting an investor’s overall portfolio performance. It’s important to remember that diversification does not ensure a profit or guarantee against loss.
LOWER FEES AND EXPENSES. Because most ETFs are passively managed, they typically have low management fees and operating expenses. However, frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
TRADING FLEXIBILITY. ETFs trade all day long, so investors can lock in the market value of the ETF anytime during the trading day. Because ETFs trade like stocks on an exchange, a wider range of techniques (short selling, stop loss and limit orders) can be used to take advantage of anticipated market movements. It’s important to keep in mind that frequent ETF trading, which typically occurs through a broker, can significantly increase brokerage commissions potentially washing away any savings from low fees or costs.
TRANSPARENCY. Investors have all the information they need to make informed investments—no strategy drift or black boxes to decipher. With ETFs, you know precisely which securities the ETF holds and what you’re invested in—there is no need to wait for the end of the quarter to review the fund’s holdings.
TAX EFFICIENCY. The ETF investor decides when to sell his or her ETF shares and much like a stock transaction the individual controls the timing of any taxes on any resulting capital gain/loss. Unlike mutual fund investors, ETF buyers and sellers usually don’t assume as high a tax burden for fellow shareholder redemptions. In this case, the resulting capital gains tax burden would be shared by all of the ETF’s investors.**
DEFINITIONS
FLEXIBLE TRADING OPTIONS
Ease and efficiency with which one can purchase a security. ETFs, like stocks, trade on an exchange and can be bought and sold at any point during trading hours at their current market value. Buy and sell orders for mutual fund shares are placed and transacted after the market close at the mutual fund’s closing market value, where the closing value is calculated at the end of the trading day.
Source: “State Street Global Advisors ETFs: A Brief Introduction”.
TAX TREATMENTS
Tax consequences related to the trading of securities. Turnover of individual stocks will have either short term or capital gains tax consequences for the individual investor only. Similarly, holders of ETFs will not typically be affected by other shareholder redemptions. With a mutual fund, if multiple shareholders redeem their shares concurrently, the fund manager may have to sell underlying holdings to raise cash to pay those shareholders; in addition to transaction costs, this could trigger capital gains. The taxes on those capital gains would then be absorbed by all shareholders in the fund.
Source: “State Street Global Advisors ETFs: A Brief Introduction”.
INDEX DEFINITIONS
S&P 500 INDEX
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally considered representative of the US stock market. The index is heavily weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The S&P 500 Index figures do not reflect any fees, expenses or taxes.
The Dow Jones U.S. Total Stock Market Index represents the broadest index for the US equity market, measuring the performance of all US equity securities with readily available price data. Over 5,000 capitalization weighted security returns are used to adjust the index.
Source: dowjonesindexes.com.
TALK TO YOUR FINANCIAL ADVISOR
If exchange traded funds interest you, speak to your advisor to determine if you could benefit from incorporating ETFs in your investment plans.
Your advisor can help you analyze your current investments, risk tolerance, tax situation and time horizon, and then recommend strategies to help you achieve your goals.
ABOUT SPDR® ETFs
SPDR ETFs are a comprehensive fund family of over 100 ETFs, spanning an array of international and domestic asset classes. Offered by State Street Global Advisors, SPDR ETFs provide investors with the flexibility to select investments that are precisely aligned to their investment strategy. Recognized as the industry pioneer, State Street Global Advisors created the first ETF in 1993 (SPDR S&P 500®—Ticker SPY). Since then, we’ve sustained our place as an industry innovator through the introduction of many ground-breaking products, including first-to-market launches with gold, international real estate, international fixed income and sector ETFs.
For information about our ETF family, visit spdrs.com.
STATE STREET GLOBAL ADVISORS
State Street Financial CenterOne Lincoln StreetBoston, MA 02111
866.787.2257spdrs.com
** Like mutual funds, though, there may be times when changes in the underlying index trigger the sale of securities held by the ETF.
FOR PUBLIC USE.
IMPORTANT RISK INFORMATION
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below the ETFs’ net asset value. Brokerage commissions and ETF expenses will reduce returns.
Passive management and the creation/redemption process can help minimize capital gains distributions.
Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
The use of short selling entails a high degree of risk, may increase potential losses and is not suitable for all investors. Please assess your financial circumstances and risk tolerance prior to short selling.
Information represented in this piece does not constitute legal, tax, or investment advice. Investors should consult their legal, tax, and financial advisors before making any financial decisions. Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index.
Foreign investments involve greater risks than US investments, including political and economic risks and the risk of currency fluctuations, all of which may be magnified in emerging markets.
Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed by SSgA. The Dow Jones US Total Stock Market Index is a product of S&P Dow Jones Indices LLC, and has been licensed by SSgA.
“SPDR” is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”) and has been licensed for use by State Street Corporation. STANDARD & POOR’S, S&P and S&P 500 are registered trademarks of Standard & Poor’s Financial Services LLC. No financial product offered by State Street Corporation or its affiliates is sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P and its affiliates make no representation, warranty or condition regarding the advisability of buying, selling or holding units/shares in such products. Further limitations and important information that could affect investors’ rights are described in the prospectus for the applicable product.
Distributor: State Street Global Markets, LLC, member FINRA, SIPC, a wholly owned subsidiary of State Street Corporation. References to State Street may include State Street Corporation and its affiliates. Certain State Street affiliates provide services and receive fees from the SPDR ETFs. ALPS Distributors, Inc., a registered broker-dealer, is distributor for SPDR S&P 500, SPDR S&P MidCap 400 and SPDR Dow Jones Industrial Average, and all unit investment trusts. ALPS Portfolio Solutions Distributor, Inc. is distributor for Select Sector SPDRs. ALPS Distributors, Inc. and ALPS Portfolio Solutions Distributor, Inc. are not affiliated with State Street Global Markets, LLC.
Before investing, consider the funds’ investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus which contains this and other information, call 866.787.2257 or visit spdrs.com. Read it carefully.
