State Street Global Advisors of Boston is proposing changes to its S&P 500 index fund that it says could further shrink the fund's low expense ratio.
The change SSgA is asking shareholders to approve could reduce the fund's existing expense ratio of 0.18 percent. The SSgA funds asked shareholders in a preliminary proxy statement filed with the SEC Feb. 14 to approve a change which would allow the S&P 500 fund to adopt a master-feeder structure. Shareholders are expected to vote on the proposal at a meeting April 4.
A switch to a master-feeder structure could permit the fund to reduce expenses to as low as 0.167 percent if the fund reaches $6 billion in assets, according to the proxy statement. The fund currently has about $3 billion in assets under management, according to the proxy statement.
A master-feeder structure allows funds with the same investment objective but different sales charges to feed all of their assets into a master fund. The master-feeder structure can reduce expenses because it allows a master fund to benefit from economies of scale thanks to the master fund's size.
Both the Vanguard Group of Malvern, Pa. and USAA Funds of San Antonio, Texas now offer retail S&P 500 funds with expense ratios of 0.18 percent, according to Morningstar of Chicago, the fund tracking firm. Charles Schwab & Co. of San Francisco and Fidelity Investments of Boston offer S&P 500 funds with 0.19 percent fees, according to Morningstar.