Case study of ESG changes to SPDR ETFs

State Street Global Advisers is converting four of its global exchange traded funds into ESG funds and changing the underlying index they track from 1 February 2022.

The SPDR® Dow Jones® Global Real Estate fund (DJRE) will change its name to the SPDR® Dow Jones® Global Real Estate ESG Fund, and track the Dow Jones Global Select ESG Real Estate Securities Index (RESI) (AUD). The SPDR® S&P® World ex Australia Fund (WXOZ) will change its name to the SPDR® S&P® World ex Australia Carbon Control Fund, and track the S&P Developed ex-Australia LargeMidCap Carbon Control Index (AUD). The The SPDR® S&P® World ex Australia (Hedged) Fund (WXHG) will change its name to the SPDR® S&P® World ex Australia Carbon Control (Hedged) Fund, and track the S&P Developed Ex-Australia LargeMidCap Carbon Control AUD Hedged Index, and The SPDR® S&P® Emerging Markets Fund (WEMG) will change its name to the SPDR® S&P® Emerging Markets Carbon Control Fund, and track the S&P Emerging LargeMidCap Carbon Control (AUD) Index

Head of SPDR ETF Asia Pacific distribution, Meaghan Victor, spoke to Industry Moves about the reasons for these changes and whether or not SSgA will be converting other ETFs in the SPDR suite.

Why was it important to make these updates?

From our perspective, it's about identifying improvements that we can make to products, which will actually enhance the success for our clients. And it's also ensuring that the range that we have available for investors here in Australia is actually well positioned for long term growth.

We've been here for 20 years, you know, these products that we have in the market today, were brought to market eight years ago, and it was time to take a step back, listen to what the clients were saying, and then work through, how can we best meet their needs. And that's one of the reasons why we actually made those changes. The other part is the fact that you know, the landscape is actually changing and ESG is becoming more and more integral to that.

There's the E the S and the G and we've been doing the G for a long time. As an organization we've been focused on ESG for a very long time as well. This is about now integrating that entire process, where appropriate, into the range that we have.

Was it a difficult process?

So, we've got a strong partnership with S&P as you'd be aware. ... And the key focus when we're talking to clients was really looking at that carbon neutral position and the reduction.

We wanted to make sure that we were capturing not just the exclusions, but also that focus on climate as well, in the range. It does take time to make sure that we do this properly. And we're also, from a product development perspective, are very purposeful. So, we're not just going to jump onto something, we want to make sure that what we're developing is meeting that client needs.

So how long did it take?

If I look at these four funds, it would have taken us between nine and 12 months to actually get to the landing of where we were with the announcement

Did you do a survey of customers/clients?


So yes, we absolutely do and that's from an adviser's perspective and investors' perspective as well. It's also the anecdotal feedback you get from talking to advisors. It comes back to partnerships.

You know, we've had some really strong feedback from clients in the market [since the announcement].

Will you be making similar changes to other products?

It's a great question. Because if I think about the State Street Global Advisors' process from a product development perspective, today, ESG is now just another filter that we look at when we're looking at either new products or existing product ranges. So, it's just part of a process that we're looking at, we always take a long-term view when it comes to product development.

That means that we are innovating with purpose, but what I would say is that ESG is not going to be appropriate for every fund that we have in the market.

So, we've got to take that into consideration, because if you think of some the funds we have available today and putting an ESG overlay on that portfolio is not going to be appropriate, but where we can, it will always be considered.