State Street Global Advisors, the asset management business of State Street Corporation, has launched the SPDR Barclays Global Aggregate UCITS ETF.
The fund is available unhedged on the Xetra exchange and will launch on the London Stock Exchange on January 30 and on Borsa Italiana later this year. Share classes hedged to USD, Euro, GB sterling and the Swiss franc will be available in the coming weeks.
The company writes that the SPDR Barclays Global Aggregate UCITS ETF provides investors with cost-effective exposure to one of the world’s largest and most liquid global fixed income indexes. It covers 94 per cent of the investible fixed income universe with exposure to more than 20 thousand securities, more than 2,400 issuers and 24 currencies in more than 70 countries.
“The extremely low yields in European bond markets make it compelling for European investors to seek access to a broader universe of yield dynamics outside their local region,” says Stephen Yeats, managing director and head of EMEA and APAC Fixed Income Beta Solutions for State Street Global Advisors.
“An allocation to the global aggregate index offers investors one-stop-shop access to the global bond market. Used as the basis of a core fixed income allocation, or simply as a source of diversification from domestic bonds, an exposure to the Global Aggregate index may help increase diversification, result in lower volatility and deliver better risk-adjusted returns compared to other bond indices.”
“Delivering the returns of the global aggregate in index form is complex given the extraordinary number of securities involved, but it is achievable with specialist skill and the global reach to trade effectively. Our portfolio managers in this strategy are 100 percent focused on tracking the index and understand the investible universe from all risk dimensions,” says Yeats.
“The global aggregate index is the benchmark of choice for a large proportion institutional investors,” adds Rory Tobin, global co-head of SPDR ETFs for SSGA. “Many large capital investors hold exposure to the index as a component of their strategic asset allocation, and increasingly we are seeing investors use global aggregate in more tactical ways, as a complement to more volatile strategies, to transition assets or as a liquidity sleeve.”
“Historically, given the complexity of the asset class, global aggregate mandates have been executed by active managers and as such were predominantly the domain of large clients, and out of reach for smaller investors,” says Tobin. “As the only physical UCITS ETF in the space without securities lending, this strategy has a potential value add for investors of all sizes.”
“At SSGA we have been managing global aggregate strategies since 2001. The launch of the SPDR Barclays Global Aggregate ETF represents a natural extension of our capabilities and we are delighted to add the fund to our 90+ UCITS ETF range,” concludes Tobin.
The SPDR UCITS range of fixed income strategies manages USD10 billion across 33 products and gathered a market share of over 10 per cent of ETF flows in 2017. SSGA has more than 30 years of experience managing fixed income index strategies. It has investment centres in Boston, London, Singapore, Tokyo and Sydney providing 24 hour coverage. SSGA currently offer over 40 indexed strategies globally managing USD336 billion of assets, of which over USD50 billion is in aggregate strategies.