SSgA SPDR launches global dividend and US TIPS ETFs

Jun 3rd, 2013 | By | Category: Equities

State Street Global Advisors (SSgA), which manages more than $352 billion in SPDR-branded exchange-traded funds (ETFs) worldwide, has added two more funds to its roster of ETFs on the NYSE Arca with the launch of the SPDR S&P Global Dividend ETF (WDIV) and the SPDR Barclays 1-10 Year TIPS ETF (TIPX).

SSgA SPDR launches global dividend and US TIPS ETFs

TIPS are backed by the US government.

The SPDR S&P Global Dividend ETF is designed to provide investors with exposure to both developed and emerging market dividend-paying companies, through a globally diversified income portfolio strategy.

A European domiciled version of this fund was listed on the London Stock Exchange and Deutsche Bourse two weeks ago. [See SSgA SPDR launches global and pan-Asian ‘Dividend Aristocrats’ ETFs].

The SPDR Barclays 1-10 Year TIPS ETF, meanwhile, is designed to provide investors with access to US Treasury Inflation Protected Securities (TIPS), a type of US government-backed bond which can help investors protect against the loss of purchasing power that inflation causes.

The SPDR S&P Global Dividend ETF is linked to the S&P Global Dividend Aristocrats Index, part of the highly popular ‘S&P Dividend Aristocrats’ family. The index measures the performance of the highest dividend-yielding companies within the S&P Global Broad Market Index (BMI) that have followed a policy of increasing or stable dividends for at least 10 consecutive years. To ensure diversification, the weight for each index constituent is capped at 3%, and the weight of each country and GICS Sector is capped at 25% at each index rebalancing. The fund’s expense ratio is 0.40%.

James Ross, senior managing director and global head of SPDR ETFs at SSgA, said: “In the sustained low-rate environment, clients are grappling with how to meet their income objectives while staying within their own risk boundaries. Investors are embracing strongly diversified income products to provide a level of downside protection in their portfolios, as evidenced by the growth of the SPDR S&P Dividend ETF (SDY), the SPDR S&P Emerging Markets Dividend ETF (EDIV) and the SPDR S&P International Dividend ETF (DWX).” (All listed on the NYSE Arca).

He added: “The new SPDR S&P Global Dividend ETF adds to this suite of products and gives investors access to companies in both developed and emerging markets that have consistently delivered high yield dividends over the last ten years.”

The SPDR Barclays 1-10 Year TIPS ETF, also based on an income theme, seeks to track the performance of the Barclays 1-10 Year Government Inflation-linked Bond Index. This index includes publicly issued TIPS that have at least one year remaining to maturity and less than 10 years on index rebalancing date, with an issue size equal to or in excess of $500 million.

TIPS – which are comparable to index-linked gilts in the UK – are useful tools to help guard against inflation. Unlike most bonds, which have a fixed principal (essentially the amount repaid at the end of a bond’s life), the principal of a TIPS increases with inflation, as measured by the Consumer Price Index. The fund’s expense ratio is 0.15%.

The fund complements SSgA’s existing fund in this space, the SPDR Barclays TIPS ETF (IPE), which provides exposure to the broader Barclays US Government Inflation-linked Bond Index and has some $719 million in assets.

The largest ETF in the TIPS space is the iShares TIPS Bond ETF (TIP) with $18.7 billion in assets.

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