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State Street launches municipal bond ETF

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State Street Global Advisors, the investment management arm of State Street Corporation, has announced the launch of the SPDR Lehman Municipal Bond ETF on the American Stock Exchange.

State Street Global Advisors, the investment management arm of State Street Corporation, has announced the launch of the SPDR Lehman Municipal Bond ETF on the American Stock Exchange.

Designed to offer investors the combined benefits of municipal bonds and exchange-traded funds, the SPDR Lehman Municipal Bond ETF aims to correspond to the price and yield performance of the Lehman Brothers Municipal Managed Money Index.

The Municipal Managed Money Index was launched in June 2004 with historical results provided since June 1993 by Lehman Brothers. The index provides exposure to more than 22,000 issues in the most liquid segment of the municipal bond market.

The average credit quality of the municipal securities within the Index is AA1/AAA, and none of the bonds are currently subject to the US Alternative Minimum Tax.

‘The SPDR Lehman Municipal Bond ETF was developed for our clients who have asked for an investment vehicle that provides the advantages of federal tax-free municipal bonds with the additional benefits that ETFs offer,’ says Anthony Rochte, a senior managing director of State Street Global Advisors.

‘When its annual expense ratio of 0.20 per cent is compared with municipal bond mutual funds, which have an average expense ratio of 1.10 per cent, the SPDR Lehman Municipal Bond ETF also offers more trading flexibility and a considerably lower expense ratio.’

The SPDR Lehman Municipal Bond ETF complements State Street’s growing range of fixed-income ETFs. In May, State Street launched five new SPDRs providing access to an array of fixed-income segments and maturities, the Lehman 1-3 Month T-Bill, Barclays TIPS ETF, Lehman Aggregate Bond ETF, Lehman Intermediate Term Treasury ETF and Lehman Long Term Treasury ETF.

State Street manages more than USD222bn in total fixed income globally and more than USD114bn in ETF assets worldwide. State Street Global Advisors, which has managed fixed-income index funds since 1984, had USD1.9trn in assets under management at the end of June.

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