Two State Street Funds Get SEC 'Exemptive' Relief, Allowing Greater Fund Investment

State Street Corporation said that its SPDR and DIAMONDS exchange traded funds(ETFs) have received additional "exemptive" relief from the Securities and Exchange Commission. This relief will enable registered investment companies to invest in these ETFs in excess of the limits

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State Street Corporation said that its SPDR and DIAMONDS exchange-traded funds(ETFs) have received additional “exemptive” relief from the Securities and Exchange Commission.

This relief will enable registered investment companies to invest in these ETFs in excess of the limits of Section 12(d)(1)(A) of the Investment Company Act of 1940, subject to certain conditions.

Section 12(d)(1)(A) prohibits an investment company from a) acquiring more than three percent of the total outstanding voting stock of another investment company; b) investing more than five percent of its total assets in a single investment company; and c) investing more than 10 percent of its total assets in two or more investment companies.

“The SPDR and DIAMONDS have proven to be effective portfolio management tools, providing investors with broadly diversified, liquid and cost effective exposure to equity markets,” said Gus Fleites, managing director of SSgA’s Advisor Strategies team. “The SEC’s action provides US mutual funds with more flexibility in utilizing the SPDR and DIAMONDS toward achieving their investment goals.”

State Street, in partnership with the American Stock Exchange, introduced the first ETF, the SPDR, in 1993 and the DIAMONDS in 1998.

Both are Unit Investment Trusts. The SPDR Trust has assets of approximately $42 billion and is benchmarked against the S&P 500 Index. The DIAMONDS Trust has assets of approximately $7.6 billion and is benchmarked against the Dow Jones Industrial Average.

“The SEC’s approval of the exemptive relief for these ETFs will help to enhance their utility,” said Cliff Weber, senior vice president of the Amex ETF Marketplace. “As the global leader in listing exchange traded funds, we continually strive to bring new and improved ETF investing opportunities to the marketplace.”

State Street Global Advisors, the investment management arm of State Street Corporation and the largest institutional fund manager in the world, has more than $63 billion in ETF assets under management worldwide, which represents approximately 27 percent of ETF assets globally.

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