State Street Global Advisors (SSGA) has launched a new actively managed fixed income ETF that seeks to outperform over a full market cycle by capturing credit risk premia across multiple bond sectors.
Kevin Kearns, leader of the Alpha Strategies team at Loomis Sayles.
The SPDR Loomis Sayles Opportunistic Bond ETF (OBND US) has been listed on Cboe BZX Exchange and comes with an expense ratio of 0.55%.
Sue Thompson, Head of SPDR Americas Distribution at SSGA, said: “The low interest rate environment is driving demand for non-traditional fixed income investments. OBND seeks to meet investors’ needs for both yield and diversification while providing the benefits of active risk management.”
The fund, which debuts with $30 million in assets, is sub-advised by the Alpha Strategies division at Loomis Sayles, a US-based affiliate of French asset manager Natixis Investment Managers.
The team is headed up by Kevin Kearns, co-manager of multi-asset credit and income strategies, and supported by portfolio managers Andrea DiCenso and Thomas Stolberg.
Investment approach
The fund may invest in a wide range of fixed income securities including sovereign and quasi-sovereign debt, inflation-protected Treasuries, corporate bonds, mortgage-backed securities, asset-backed securities, collateralized debt obligations, repurchase agreements, structured notes, bank loans, preferred securities, convertible preferred securities, and contingent convertible (CoCo) securities. Eligible issues may be fixed, variable, floating, adjustable, or zero-coupon.
The fund may also utilize a broad range of derivatives on securities, indices, currencies, or interest rates for hedging or investment purposes.
The fund is unconstrained in its holdings of non-investment-grade rated debt, while up to 10% of portfolio assets may be allocated to securities denominated in currencies other than the US dollar. These non-US dollar holdings will be currency hedged.
Under normal market conditions, the fund’s managers seek to maintain a weighted average portfolio duration under seven years.
Sector allocation is determined using a top-down credit-cycle approach supported by deep fundamental research informed by macroeconomic, asset class, and industry analysis driven by real-time market data, economic releases, and trading patterns, coupled with Loomis Sayles’ quantitative economic and market cycle identifying models.
Kevin Kearns said: “As a team, we are passionate about combining what we believe is best-in-class fundamental and advanced quantitative research with leading-edge technology in support of meeting our clients’ goals. We are excited to join SSGA’s distinguished SPDR franchise with OBND which is an innovative solution for credit investors.”