Spiders just got cheaper.
The annual expenses on the popular
Standard & Poor's Depositary Receipts
-- commonly known as Spiders -- have been reduced to a maximum 0.12%, or 12 basis points, from the current 0.18%.
The move by
State Street Bank & Trust
, trustee for the Spiders, appears to be a pre-emptive strike aimed at
Barclays Global Investors.
In a matter of weeks, Barclays is expected to
introduce a slew of its own exchange-traded funds, one of which will compete directly with the Spider.
Barclays must come up with a way to attract attention to its own rival products, and
one area of battle will obviously be cost. Barclays, however, has yet to disclose the expenses on its upcoming exchange-traded funds.
State Street is capping the expenses at 12 basis points for two years, according to a filing with the
Securities and Exchange Commission
"It could go lower," says Gus Fleites, head of exchange-traded products at
State Street Global Advisors
. "We're just ensuring it's not going to go higher."
As part of the move, State Street cut its trustee fees, a major component of the portfolio's expenses.
Spiders track the benchmark
index, like many index mutual funds, but shares trade just like stocks.
Launched in 1993, the Spiders portfolio is the largest of the existing exchange-traded products, and now commands $16.6 billion in assets.