SSGA to list lower-cost share class of €1.3bn eurozone government bond ETF

Nov 17th, 2020 | By | Category: Fixed Income

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State Street Global Advisors is set to list a lower-cost, accumulating share class of its eurozone sovereign bond ETF, the €1.3 billion SPDR Bloomberg Barclays Euro Government Bond UCITS ETF.

SSGA to launch lower-cost share class of €1.3bn eurozone government bond ETF

The fund provides broad maturity exposure to the eurozone government bond market.

The fund, which debuted in May 2011, is presently only available via a distributing share class listed across major European exchanges including London Stock Exchange (GOVY LN), Xetra (SYBB GY), Euronext Paris (GOVY FP), Borsa Italiana (GOVY IM), and SIX Swiss Exchange (GOVY SW).

While the preexisting distributing share class comes with an expense ratio of 0.15%, the new accumulating class will cost just 0.10%. It is expected to list on Euronext on 23 November.

The expense ratio attributable to the distributing share class is expected to remain unchanged.

The ETF is linked to the Bloomberg Barclays Euro Treasury Bond Index which consists of euro-denominated, investment-grade bonds with a range of maturities from sovereign issuers located in the eurozone. Fixed-rate and original zero-coupon bonds are eligible for inclusion as long as they have a minimum amount outstanding of €300 million and a time to maturity greater than one year.

Bonds are weighted by market value outstanding.

The index is currently yielding 1.75% with an effective duration of 8.87 years. Bonds from the governments of France and Italy each account for roughly a quarter of the index’s total weight with the next largest exposures being Germany (17.7%) and Spain (14.0%).

Bonds rated AA represent the largest credit bucket exposure at 35.2% followed by those rated BBB (25.1%), AAA (22.4%), and A (17.3%).

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