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SSgA unveils two new fixed income SPDR ETFs

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State Street Global Advisors (SSgA), the asset management business of State Street Corporation, launched the SPDR Barclays Capital Short Term Treasury ETF (symbol:SST) and the SPDR Barclays Capital Investment Grade Floating Rate ETF (symbol:FLRN) on the NYSE Arca on 1 December, 2011.

The addition of these two exchange traded funds (ETFs) strengthens State Street’s family of fixed income ETFs, which now includes 26 SPDR ETFs that provide precise access to a wide range of fixed income investments.

The SPDR Barclays Capital Short Term Treasury ETF is the first ETF designed to track the performance of the Barclays Capital 1-5 Year US Treasury Index. The Index includes all publicly issued US Treasury securities that have a remaining maturity of greater than or equal to one year and less than five years, are rated investment grade, and have USD250 million or more of outstanding face value. As of 18 November, 2011, there were approximately 114 securities included in the Index with an average maturity of 2.8 years. The SPDR Barclays Capital Short Term Treasury ETF’s expense ratio is 0.12 per cent.

"With short-term interest rates near zero, the potential for a rising interest rate environment is a concern for many investors in long-term Treasury bonds," says James Ross, senior managing director and global head of SPDR Exchange Traded Funds at State Street Global Advisors. "The launch of the SPDR Barclays Capital Short Term Treasury ETF enhances our short-term government bond SPDR ETF offering, which also includes the SPDR Barclays Capital 1-3 Month T-Bill ETF."

The SPDR Barclays Capital Investment Grade Floating Rate ETF is designed to track the performance of the Barclays Capital US Dollar Floating Rate Note < 5 Years Index. The Index includes US dollar-denominated, investment grade floating rate notes that have a remaining maturity of greater than or equal to one month and less than five years, and have USD300 million or more of outstanding face value. As of 18 November, 2011, there were approximately 320 securities in the Index with an average maturity of 1.71 years. The SPDR Barclays Capital Investment Grade Floating Rate ETF’s expense ratio is 0.15 per cent.

Floating rate notes, which are often referred to as "FRNs" or "floaters," are debt issues with variable coupon payments that are based on a reference rate, such as 3-month LIBOR with a fixed spread. Coupons are reset periodically and can rise or fall with changes in the reference rate while the spread remains constant.

"With cost efficient access to floating rate notes, an asset class that is also well positioned for a rising rate environment and features low correlations to many traditional equity and fixed income investments, the SPDR Barclays Capital Investment Grade Floating Rate ETF offers a compelling solution to investors seeking to enhance the diversification of their bond portfolio," says Ross.

 

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