SPDR
Portfolio MSCI Global Stock Market ETF
MANAGEMENT'S DISCUSSION OF
FUND PERFORMANCE (Unaudited)
The SPDR Portfolio MSCI
Global Stock Market ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index that tracks securities of publicly-traded companies in developed
and emerging markets. The Fund’s benchmark is the MSCI ACWI IMI Index (the “Index”).
For the 12-month period ended September 30, 2023 (the
“Reporting Period”), the total return for the Fund was 20.46%, and the Index was 20.16%. The Fund and Index returns reflect the reinvestment of dividends and other income. The Fund’s performance reflects the expenses of managing
the Fund, including brokerage and advisory expenses. The Index is unmanaged and Index returns do not reflect fees and expenses of any kind, which would have a negative impact on returns. Cash drag, optimization, and tax withholdings contributed to
the difference between the Fund’s performance and that of the Index.
The Reporting Period’s market environment was
significantly influenced by the U.S. Federal Reserve (the “Fed”), as its efforts to combat the highest U.S. inflation in nearly 40 years took center stage, as did the immediate downstream effects of these large rate increases and
speculation on when and if those rate increases would have to be halted, or even reversed. But there were other themes connected to tech and the prospects of artificial intelligence that were also impactful.
After three consecutive quarters of negative performance, the
last quarter of 2022 ended the calendar year positively for global equities largely due to the equity rallies seen during October and November.
A surging energy sector that was benefitting from higher
energy prices also helped. After four consecutive 75 bps rate increases, the Fed tightened by only 50 bps at December’s meeting. However, the Fed reiterated that it would maintain its staunchly hawkish stance, capping some market exuberance
but maintaining the market’s gains for the quarter.
As the first quarter of 2023 began, markets moved higher as
investors interpreted inflation, GDP and headline unemployment numbers as net positives, despite some weakening corporate earnings. But the sudden collapse of Silicon Valley Bank and the deposit vulnerability it exposed in regional banks-driven by
depositors chasing higher yields available in money market funds and the like-significantly rattled investors. Fortunately, when regulatory bailouts appeared to limit bank failures and contain the financial contagion, the markets recovered with
surprising strength connected to newfound enthusiasm for tech companies and all things AI-related.
This enthusiasm in the U.S. continued into the second
quarter of 2023, assisted by falling inflation and a June pause in rate hikes. Global central banks pressed ahead with interest rate hikes, however, as both the Bank of England and the Norges Bank surprised markets by hiking 50 bps each. The Bank of
Canada resumed hiking too. In July, the Reserve Bank of Australia paused after two successive hikes.
Markets continued to climb after June’s U.S.
inflation number came in at only 3%, which was its slowest pace in more than two years reinvigorating investors on the idea that a soft landing might indeed be possible. Unfortunately, a downgrade of the United States’ credit rating on August
1st put an end to the euphoria. That, combined with record high mortgage interest rates, additional regional bank downgrades and concerns about the Chinese property market and its impact on China’s overall economy, put newfound fear into
investor sentiment. Tech names sold off particularly strongly as the Fed communicated that it might hold rates higher for longer than expected, giving markets a tough September to end the year-long period.
The Fund used equity index futures in order to equitize
dividend receivables and minimize cash drag during the Reporting Period. The Fund’s use of index futures slightly detracted from Fund performance relative to the Index.
On an individual security level, the top positive
contributors to the Fund’s performance during the Reporting Period were NVIDIA Corp., Microsoft Corp., and Apple, Inc.. The top negative contributors to the Fund’s performance during the Reporting Period were Tesla, Inc., NextEra Energy,
Inc. and CVS Health Corp..
The views expressed above
reflect those of the Fund’s portfolio manager only through the Reporting Period, and do not necessarily represent the views of the Adviser as a whole. Any such views are subject to change at any time based upon market or other conditions and
the Adviser disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund are based on numerous factors, may not be relied on as an indication of trading intent
on behalf of any fund.
