RELY ON SPY THE LIQUIDITY LEADER LET S START

Transcription

1 RELY ON SPY THE LIQUIDITY LEADER LET S START

2 WHY DOES LIQUIDITY MATTER? For ETF investors, liquidity directly influences trading costs. Driven by trading volume, liquidity manifests itself in the bid/ask spread, the difference between an ETF s buy and sell price. Funds that offer ample liquidity often maintain price stability due to their narrower bid-ask spreads. Higher liquidity means you can trade more quickly and at a reasonable cost no matter the size of your trade.

3 The SPDR S&P 500 ETF (SPY) is the Most Heavily Traded, Liquid Security in the World SPY trades 11.7 million shares per hour and has an Average Daily Trading Volume (ADV) of nearly $16 billion. That s 3.5 times more than Apple, the largest company in the world by market cap. SPY $16 Billion ADV Apple $4.9 Billion ADV But there s plenty more to know about SPY s liquidity Source: Bloomberg Finance L.P., State Street Global Advisors, as of 9/30/2017. Apple had a 3.67% weight in SPY on 9/30/2017.

4 SPY Accounts for 25% of the ETF Industry s Total Average Daily Trading Volume In fact, SPY s volume over the last 3 months is still larger than aggregating the average daily trading volume of the next 18 largest ETFs by AUM combined. 25 % SPY Next 18 largest ETFs ETF Industry Total Average Daily Trading Volume All other ETFs Source: Bloomberg Finance L.P., State Street Global Advisors, as of 9/30/2017. Average dollar volume over the previous 3 months.

5 SPY Trades in a Tighter Range Compared to IVV and VOO In fact, SPY is the only ETF to maintain a penny-wide spread for 12 consecutive years. SPY's historically consistent penny-wide spread led to a tight basis point range over the past year when the markets were gripped by episodic volatility. Bid/Ask Spread Range in 2017 Max % Max % Avg % Max Avg Min % % % Avg Min % % Min % SPDR S&P 500 ETF (SPY) Source: Bloomberg Finance L.P., State Street Global Advisors, as of 9/30/2017. Vanguard S&P 500 ETF (VOO) ishares Core S&P 500 ETF (IVV)

6 SPY's Market is Deeper than Other Highly Traded Securities SPY s average displayed bid/ask quote size is roughly 5x larger than IVV, VOO or AAPL. That means SPY has allowed investors to trade more shares at the quoted price on any given day. SPY 14,237 shares VOO 3,891 shares IVV 2,585 shares AAPL 1,264 shares Source: NYSE Arcavision as of 9/30/2017. Average from 6/30/2017-9/30/2017. Average Size: Total number of shares displayed at NYSE Arca's best price. This metric is conditional on a 2- sided market.

7 And SPY s Volume and Tight Spreads Have Held Up in Volatile Markets A market crisis where sellers tend to outnumber buyers can diminish liquidity and make trading difficult and costly. SPY has historically behaved as expected in times of crisis, offering investors the size, scale and volume that translates into liquidity when it s most needed. Dow Jones Industrial Average Falls 7% 9/29/2008 The Flash Crash 5/6/2010 US Debt Rating Downgrade 8/9/2011 Flash Crash 8/24/2015 $ VOLUME $ SPREAD $ VOLUME $ SPREAD $ VOLUME $ SPREAD $ VOLUME $ SPREAD SPY 53B.01 70B.01 71B.01 98B.01 IVV 1B.03 1B.15 1B.04 2B.04 VOO N/A N/A N/A N/A 58M.04 2B.09 Source: Bloomberg Finance L.P., State Street Global Advisors, as of 9/30/2017.

8 No Wonder the World s Most Sophisticated Investors Choose SPY SPY maintains a fluid and tight market because it is commonly used by investors of all types. 74 % 99.9 % of the assets in SPY are owned by Institutional Investors of the assets in IVV are owned by Institutional Investors 66 % of the assets in 49 % VOO are owned by Institutional Investors of the open interest of S&P 500 ETF options are based on SPY Source: Bloomberg Finance L.P., State Street Global Advisors, as of 9/30/2017.

9 Want to Learn More? For more information on SPY, visit spdrs.com/relyonspy or call

10 Glossary Average Daily Trading Volume ADV The amount of individual securities traded in a day on average over a specified period of time. Trading activity relates to the liquidity of a security when average daily trading volume is high, the stock can be easily traded and has high liquidity; if trading volume isn't very high, the security will tend to be less expensive because people are not as willing to buy it. As a result, average daily trading volume can have an effect on the price of the security. High trading volume helps maintain price stability with narrower bid-ask spreads. Bid-Ask Spread, or Spread The difference between the highest price a buyer is willing to pay for an asset and the lowest price the seller will accept to sell. Bid-ask spreads are a key measure of the liquidity of an asset or security. Dow Jones Industrial Average (DJIA) A price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ. Open Interest The number of contracts or commitments outstanding in futures and options that are trading on an official exchange at any one time. S&P 500 Index A popular benchmark for U.S. large-cap equities that includes 500 companies from leading industries and captures approximately 80% coverage of available market capitalization.

11 ssga.com spdrs.com For Public Use State Street Global Advisors One Lincoln Street, Boston, MA T: Important Risk Information SPY (SPDR S&P 500 ETF), IVV (ishares Core S&P 500 ETF), and VOO (Vanguard S&P 500 ETF) are all exchange traded funds which seek to track the S&P 500 Index. However, differences exist between the products. SPY is a unit investment trust (UIT), and per its prospectus it cannot reinvest the underlying dividends paid by the constituent holdings. As a UIT, SPY cannot hold any security that is not within the defined benchmark, the S&P 500 Index, and therefore it prevents the trust from holding a short term cash investment vehicle. In addition, as a UIT SPY cannot lend out any of its securities to a securities lending agent. IVV and VOO are registered investment companies and have the ability to reinvest dividends, hold a short term cash investment vehicle, and lend out securities. SPY follows a full replication strategy as stated above while VOO and IVV are not required to hold all constituents of the underlying index as stated in each funds prospectus. SPY has a higher gross expense ratio at % compared to IVV at 0.04% and VOO at 0.04%. Apple Inc. is a publicly traded company and not a registered investment vehicle or unit investment trust. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF's net asset value. Brokerage commissions and ETF expenses will reduce returns. In general, ETFs can be expected to move up or down in value with the value of the applicable index. Although ETF shares may be bought and sold on the exchange through any brokerage account, ETF shares are not individually redeemable from the Fund. Investors may acquire ETFs and tender them for redemption through the Fund in Creation Unit Aggregations only. Please see the prospectus for more details. There can be no assurance that a liquid market will be maintained for ETF shares. While the shares of ETFs are tradable on secondary markets, they may not readily trade in all market conditions and may trade at significant discounts in periods of market stress. Equity securities may fluctuate in value in response to the activities of individual companies and general market and economic conditions. Standard & Poor s, S&P and SPDR are registered trademarks of Standard & Poor s Financial Services LLC, a division of S&P Global ("S&P"); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation s financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index. The trademarks and service marks referenced herein are the property of their respective owners. Third party data providers make no warranties or representations of any kind relating to the accuracy, completeness or timeliness of the data and have no liability for damages of any kind relating to the use of such data. State Street Global Advisors Funds Distributors, LLC, member FINRA, SIPC, an indirect 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., member FINRA, is distributor for SPDR S&P 500, a unit investment trust. ALPS Distributors, Inc. is not affiliated with State Street Global Markets, LLC (marketing agent). 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 or visit spdrs.com. Read it carefully. Not FDIC Insured No Bank Guarantee May Lose Value 2018 State Street Corporation. All Rights Reserved. ID NA.RTL 0118 Exp. Date: 9/30/2018 SPD001521