On Tuesday, Tema ETFs rang in the month of April with the launch of the Tema S&P 500 Historical Weight ETF Strategy (DSPY)
For its investors, DSPY looks to offer growth over a long-term time horizon. The fund has a net expense ratio of 18 basis points.
Compared to its peers in the large-cap ETF space, DSPY looks to stand out by focusing on historical weight. This methodology focuses on investing in S&P 500 securities and weighting them to align closely with historical weight. Historical weight is calculated using the average weighting of each company within the S&P 500 since December 1989.
Recent volatility and inflation worries have caused many of the tried-and-true market-cap-weighted strategies to falter. However, equal-weight large-cap strategies are not yet seeing the breakout performance some advisors hoped for. As such, DSPY’s middle-ground solution may very well offer the best path forward for large-caps.
Historic Opportunities
“The DSPY ETF is the first innovation on S&P 500 concentration in 22 years, launched in association with S&P Global Inc.,” said Maurits Pot, CEO and founder of Tema. “DSPY addresses two growing risks following a strong decade for the S&P 500: Firstly, the top 10 holdings in the S&P 500 are ~39% of the index, the highest concentration in over 50 years. Secondly, the overlap between S&P 500 and S&P 500 Equal Weight is down to under 50%, increasing the tracking error to a multidecade high as concentration reduces this overlap. DSPY provides an innovative rules-based solution by reducing both S&P 500 concentration and S&P 500 Equal Weight tracking error.”
Furthermore, recent sell-offs have created opportunities for advisors and investors alike to find alternative ways to handle large-cap overconcentration. With Tema’s experienced fund team at the helm, DSPY could prove itself as a lucrative means to capture returns from the S&P 500.
DSPY comes online as the latest fund from Tema ETFs. One of the largest Tema ETFs, the Tema American Reshoring ETF (RSHO ), has roughly $200 million in assets under management, according to FactSet data.
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