October was a brisk month in the ETF marketplace, with fee cuts and index changes at major fund complexes like the iShares and Vanguard ETFs. In what will likely be the final crop of newly launched ETFs for the month, State Street Global Advisors (SSgA) debuted the SPDR S&P 1500 Value Tilt ETF (NYSEArca:VLU) and the SPDR S&P 1500 Momentum Tilt ETF (NYSEArca:MMTM).
"Providing advisors and investors with unique opportunities to take advantage of sources of outperformance relative to standard cap-weighted indexes and combining the advantages of value and momentum tilt investing with the benefits of exchange traded funds, our new SPDR Tilt ETFs further illustrate the growing popularity of advanced beta investment strategies," said James Ross, senior managing director and global head of SPDR Exchange Traded Funds and head of Intermediary Distribution at State Street Global Advisors.
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VLU is linked to the S&P 1500 Low Valuation Tilt Index which applies an alternative weighting methodology to the S&P 1500 Index so that stocks with relatively low valuations are overweight relative to the S&P 1500 Index and stocks with relatively high valuations are underweight. Standard & Poor's estimates the valuation of each stock in the S&P 1500 Index based on the ratio of its price to its level of earnings, cash flow, sales, book value, and dividends.
VLU's market cap weighted index is rebalanced annually, and as of 9/30/12 it included approximately 1,472 securities.
MMTM tracks the S&P 1500 Positive Momentum Tilt Index by overweighting stocks with relatively high momentum relative to the S&P 1500 Index. Conversely, stocks with relatively low momentum receive less representation within the fund. Standard & Poor's estimates the momentum of each stock in the S&P 1500 Index based on its price performance over the 11 months ending one month before the index rebalancing date.
MMTM's market cap weighted index is rebalanced quarterly, and as of 9/30/12, included approximately 1,491 securities.
State Street manages more than $337 billion in SPDR ETF assets worldwide, as of September 30.
VLU and MMTM were introduced for trading on October 25 and both funds charge annual expenses of 0.35%.
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