HEAD-TO-HEAD: SSGA vs Value Partners

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As the two funds track the same benchmark, there is only a small difference in return. Over the past three years, the SPDR fund delivered 8.8% while the Value fund returned 8.63%.

A metric for ETFs is the tracking difference, which indicates the discrepancy between ETF performance and the index return by measuring the difference of change in net asset value of the ETF and benchmark.

The closer the value of the tracking difference is to zero, the better the ETF is in tracking the index.

In the past five years, the Value ETF tracked the benchmark more consistently and closely than SPDR.

Since the tracking difference is rarely nil, both funds are within an acceptable level. However, Ng said an ETF with a consistent tracking difference could be an advantage for investors.

Tracking difference in the past five years

Source: FE

Another metric for ETFs is tracking error, which indicates the volatility in the difference of performance between the fund and its benchmark.

In terms of tracking error, Value’s fund was 11.43, which is slightly higher than SPDR’s 10.06 over the past three years, according to FE.

Because of the secondary market function, the funds can be traded at discount or premium to the net asset value of gold. As of mid-February, Value’s fund trades at a premium of 0.56% while SPDR trades at a 0.05% premium.

“Secondary market movement would normally impact the trading price. However, even the premium of both funds is contained at a small percentage,” Ng said.

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