State Street Global Advisors (SSGA), the asset manager behind the SPDR range of exchange-traded funds, has launched 11 fixed income ETFs on the Deutsche Börse Xetra. The funds, comprising US Treasury, US corporate, Euro government and Euro corporate bond exposures, are linked to Barclays indices and provide tools for investors looking to target particular segments of the yield curve.
Alexis Marinof, EMEA head of SPDR ETFs.
Alexis Marinof, EMEA head of SPDR ETFs commented: “We are proud innovators in fixed income ETFs, having launched six firsts to the European market, including our EM Local Currency ETF and Global Convertibles ETF. Whilst we continue to help investors gain exposure to more complex and hard to access segments of the market, these latest launches support their demand for low cost solutions for their core portfolio.”
He added: “We are in a ‘lower for longer’ economic environment with low growth, subdued inflation, and limited global policy tightening all on the cards. In addition to this, regulatory requirements continue to drive cost pressures. Against this backdrop, investors understandably remain focused on seeking ways to make their portfolios as efficient as possible, and low cost, easy-to-use ETFs are the natural choice.”
The ETFs can be used for a variety of different functions, including as core portfolio building blocks, but will likely find favour among investors looking to tactically position their portfolios ahead of shifts and twists in the yield curve, particularly at a time of tightening Federal Reserve monetary policy.
Allocation to different segments of the yield curve has historically provided great variability in return. For example, between 1995 – 2015 the Barclays US Treasury Index returned 217%; however, the 1-3 year index returned 125% while the 10-year plus index returned 410%. Similarly, since the creation of the Euro single currency to the end of 2015 the Barclays Euro Treasury Index returned 126% while the 1-3 year index returned 72% and the 10-year plus index returned 195%.
The newly launched funds include:
SPDR Barclays U.S. Corporate Bond UCITS ETF (SYB1)
SPDR Barclays 3-10 Year U.S. Corporate Bond UCITS ETF (SYBR)
SPDR Barclays 3-5 Year U.S. Treasury Bond UCITS ETF (SPP3)
SPDR Barclays 5-7 Year U.S. Treasury Bond UCITS ETF (SPP5)
SPDR Barclays 7-10 Year U.S. Treasury Bond UCITS ETF (SPP7)
SPDR Barclays 10+ Year U.S. Treasury Bond UCITS ETF (SPPX)
SPDR Barclays 3-7 Year Euro Corporate Bond UCITS ETF (SPPI)
SPDR Barclays 7+ Year Euro Corporate Bond UCITS ETF (SPPL)
SPDR Barclays 5-7 Year Euro Government Bond UCITS ETF (SYB6)
SPDR Barclays 7-10 Year Euro Government Bond UCITS ETF (SYB7)
SPDR Barclays 10+ Year Euro Government Bond UCITS ETF (SYBV)
The ETFs have total expense ratios of between 0.15% and 0.20%.
According to SSGA, year-on-year flows into fixed income ETFs/ETPs globally have totalled close to $81 billion with assets reaching almost $510 billion.