update: iShares Core S&P 500 UCITS ETF

Der S&P 500 kann mit Fug und Recht als Königsindex bezeichnet werden, wenn es um US-Aktien geht. Mit 7 Basispunkten an Kosten zählt dieser ETF von Marktführer iShares zu einem der günstigsten USA-Aktien-ETFs am Markt. 

Caroline Gutman 21.11.2014

Rolle im Portfolio

This ETF is best suited as a core building block for a portfolio, providing broad exposure to many of the largest companies in the world’s biggest economy. With 500 large cap constituents, the S&P 500 Index covers three-quarters of the U.S. equity market and is well diversified by sector and security. Increasingly, the underlying companies themselves are becoming geographically diversified, getting more and more of their revenue from outside the United States.

U.S. equities comprise a large portion of many global equity indices, making up almost 55% of the MSCI World Index. So combining this fund with a global product might result in an overweight to U.S. equities. It would therefore work better in conjunction with a Europe, Australia and Far East (EAFE) or World ex-U.S. exposure.

The fund does not distribute any of the dividends therefore this product may not suit an investor looking for regular investment income.

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Fundamentale Analyse

Six years after the global financial crisis, the U.S. economy has taken the lead of countries on the path to economic recovery. With the S&P 500 reaching an all-time high in 2014, the financial market nosedive in 2008 and the subsequent Troubled Asset Relief Program (TARP), which bailed out AIG, Bank of America and Citigroup and rescued the automotive industry giants, seem like a distant memory.

While economic growth lost significant momentum in early 2014, blamed by many on an especially cold winter, it has since recovered to its 2013 growth rate and is on track in 2015 to meet its 3% average annualised pace of the last 30 years. The U.S. is in the midst of its longest— and slowest— economic expansionary period since World War II. But the expansion doesn’t show signs of stopping in the short-term: the economy is still running 5% below its potential output, according to the U.S. Bureau of Economic Analysis, unemployment has dropped below the Federal Open Market Committee’s 6.5% target, and inflation remains below the Fed’s 2% target.

The housing market hit a rough patch in the first half of 2014 with weak home sales numbers, all the while home prices have continued to rise year-on-year. The S&P/Case Shiller Home Price Index 20-city composite rose 8.1% in the 12 months through the end of June 2014, although it is still down about 15% from its 2006 peak.

Improved economic conditions led the Federal Reserve to end its five-year quantitative easing (QE) programme. Still, the Fed announced interest rates are unlikely to rise ’for a considerable time.’

Meanwhile, the U.S. is in the early stages of a potentially game-changing energy revolution. The U.S. has become the world’s biggest gas producer, and the economy stands to benefit from a competitive advantage that follows the development of hydraulic fracturing technology, also known as fracking.

The S&P 500 has produced an annualised total return of 9.6% over the last 20 years. Like most equity exposures, the index took a beating during the 2007-2008 financial crisis, but it has rallied considerably since then as successive rounds of quantitative easing have encouraged investors to move into risky assets. After bottoming out at 9.4 in February 2009, the price-to-earnings ratio of the S&P 500 has stayed above 17 year-to-date.

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The S&P 500 Index is a free float capitalisation-weighted portfolio of 500 large, United States domiciled stocks. To join the index, constituents must meet minimum liquidity requirements, have a public float greater than 50% of the value of their stock and have market capitalisations above $4 billion. A committee maintains the index and meets regularly to review its underlying components, making changes on an as-needed basis. If a constituent falls out of line with any of the index’s entrance criteria, the committee can use its discretion to keep it in the index if the change is deemed temporary. New entrants to the index are also meant to contribute to its overall sector balance, as measured using the Global Industry Classification Standards (GICS®). The most significant sector exposure are information technology (18-20%), financials (15-17%) and health care (13-15%). Portfolio concentration is limited, with the top ten stocks in the index making up just 17-19% of its total. Top constituents are Apple (2-3%), Exxon Mobil (2-3%), and Google (1.5-2.5%).

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The fund uses full physical replication to try to capture the performance of its benchmark, owning—to the extent possible and efficient—shares in all of the underlying constituents in the same weights as those of the index. The fund uses futures for cash equitisation purposes, which helps to limit tracking error. The fund engages in securities lending to enhance returns but at the time of writing iShares does not provide any details related to lending activity. The amount of securities that can be lent is capped to 50% per fund. BlackRock, iShares’ parent company and lending agent, passes 62.5% of the gross securities lending revenue to the fund and keeps the remaining 37.5% for itself, out of which amount it will pay the associated costs of the activity. Lending operations are hedged by taking UCITS-approved collateral greater than the loan value and by revaluing loans and collateral on a daily basis. The collateral is held in a ring-fenced account by a third party custodian. The degree of overcollateralisation is a function of the assets provided as collateral, but typically ranges from 102.5% to 112%.

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The fund’s total expense ratio is 0.07%. Other costs potentially carried by the unitholder but not included in the total expense ratio include transaction costs on the infrequent occasions when the underlying holdings change, and bid-ask spreads and brokerage fees when buy and sell orders are placed for ETF shares.

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Many providers offer ETFs tracking the S&P 500 Index, including ComStage, db x-trackers, HSBC, Lyxor, Source, Amundi, SPDR, Vanguard and UBS. The products with the lowest fees are the Source and UBS (SF) funds, with a TER of 0.05%.

Beyond the S&P 500, there are a number of index alternatives for the U.S. equity market, including the MSCI USA index, the Dow Jones Industrial Average, which is price weighted and more concentrated in its holdings, and the technology-heavy NASDAQ.

For alternatives to market capitalisation-weighted exposure to U.S. equities, there are also Ossiam ETF US Minimum Variance NR, db x-trackers S&P 500 Equal Weight and PowerShares Dynamic US Market Fund.

Über den Autor

Caroline Gutman  ist Fondsanalystin bei Morningstar.