State Street Global Advisors (SSgA) has launched two new ETFs: the SPDR Barclays Capital Short Term Treasury ETF and the SPDR Barclays Capital Investment Grade Floating Rate ETF.
SSgA has unveiled two new fixed income SPDR ETFs, including one that tracks US short term treasuries (US Treasury pictured).
The launch of these new ETFs, both listed on NYSE Arca, adds to the SPDR fixed income series, which now includes 26 fixed income ETFs across range of fixed income sectors.
The SPDR Barclays Capital Short Term Treasury ETF has an expense ratio of 0.12 percent and is designed to track the performance of the Barclays Capital 1-5 Year US Treasury Index.
This index includes all publicly-issued US Treasury securities that have a remaining maturity of greater than or equal to one year and less than five years, are rated investment grade, and have $250 million or more of outstanding face value.
As of November 18, 2011, there were approximately 114 securities included in the Index with an average maturity of 2.8 years.
James Ross, senior managing director and global head of SPDR Exchange Traded Funds at SSgA, commented: “With short-term interest rates near zero, the potential for a rising interest rate environment is a concern for many investors in long-term Treasury bonds.
“The launch of the SPDR Barclays Capital Short Term Treasury ETF enhances our short-term government bond SPDR ETF offering, which also includes the SPDR Barclays Capital 1-3 Month T-Bill ETF.”
The second of SSgA’s new SPDR funds, the SPDR Barclays Capital Investment Grade Floating Rate ETF, has an expense ratio of 0.15 percent and is designed to track the performance of the Barclays Capital US Dollar Floating Rate Note < 5 Years Index.
This index includes US dollar-denominated, investment grade floating rate notes that have a remaining maturity of greater than or equal to one month and less than five years, and have $300 million or more of outstanding face value.
As of November 18, 2011, there were approximately 320 securities in the Index with an average maturity of 1.71 years.
Floating rate notes, often referred to as “FRNs” or “floaters,” are debt issues with variable coupon payments that are based on a reference rate, such as 3-month LIBOR with a fixed spread. Coupons are reset periodically and can rise or fall with changes in the reference rate while the spread remains constant.
“With cost efficient access to floating rate notes, an asset class that is also well positioned for a rising rate environment and features low correlations to many traditional equity and fixed income investments, the SPDR Barclays Capital Investment Grade Floating Rate ETF offers a compelling solution to investors seeking to enhance the diversification of their bond portfolio,” said Ross.
As of 30 September 2011, SSgA had over $245 billion in SPDR ETF assets worldwide across a range of asset classes.