SSGA rolls out TIPS and corporate bond ETFs

Dec 4th, 2015 | By | Category: Fixed Income

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State Street Global Advisers (SSGA), the asset manager behind the SPDR range of exchange-traded funds, has launched two new funds, the SPDR Barclays US TIPS UCITS ETF (SYBY) and the SPDR Barclays 10+ Year US Corporate Bond UCITS ETF (SYBN).

SSGA rolls out TIPS and Corporate Bond ETFs

Alexis Marinof, head of SPDR ETFs EMEA.

Alexis Marinof, EMEA head of SPDR ETFs commented, “Global monetary policy continues to drive sentiment and asset class performance. These launches reflect our continued commitment to offer investors precise fixed income solutions that suit not only the current economic environment, but also allow them to take a view on potential market developments in the future.”

The SPDR Barclays US TIPS UCITS ETF invests in AAA-rated US Treasury securities whose par values increase according to changes in the US consumer price index. TIPS may serve a useful portfolio role by adding diversification and enhancing returns when inflation exceeds initial expectations. The timing of the first upcoming rate hike by the Federal Reserve is a hotly debated topic at the moment with some analysts suggesting that policymakers made an error by neglecting to begin increases in September. If the Fed mistimes their move and waits too long, inflation may rise above market consensus levels, strengthening the case for holding TIPS.

The ETF, which tracks the Barclays US Government Inflation-Linked Bond Index, trades in euros on the Deutsche Borse Xetra and carries a total expense ratio of 0.17%. It has been cross-listed on the London Stock Exchange where it trades in US dollars and British pounds.

SSGA points out that if the Federal Reserve chooses not to begin normalising interest rates in December, against a backdrop of persistent low inflationary pressure in the US, this may flatten the longer-dated end of the yield curve. Under these conditions, the SPDR Barclays 10+ Year US Corporate Bond ETF would provide enhanced returns through the extended duration of the fund. The Federal Open Market Committee meeting is scheduled for 15-16 December 2015.

The ETF which tracks the Barclays US Long Corporate Index, trades in euros on the Deutsche Borse Xetra and carries a total expense ratio of 0.20%. It has been cross-listed on the London Stock Exchange where it trades in US dollars and British pounds.

The funds are available in: Germany, the UK, France, Italy, Spain, Luxembourg, Sweden, Finland, Norway, Denmark, Austria and the Netherlands.

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