State Street Rolls Out Fixed Income ETFs
They are the SPDR BofA Merrill Lynch Crossover Corporate Bond ETF and the SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF.
The SPDR BofA Merrill Lynch Crossover Corporate Bond ETF tracks the performance of the BofA Merrill Lynch US Diversified Crossover Corporate Index, which includes 3,029 securities. Each security included in the index has a BBB1 through BB3 inclusive rating, a fixed income coupon schedule, at least one year remaining to final maturity and a minimum amount of outstanding of $250 million or more of issuance. The fund’s expense ratio is 0.30%.
The SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF seeks to track the performance of the BofA Merrill Lynch Emerging Markets Large Cap Senior Corporate Index, which includes 454 securities.
“Featuring potentially higher yields than most investment grade bonds and potentially less credit risk than most high yield issues, demand for crossover bonds is growing among financial advisers and investors during this extended low-yield environment,” said James Ross, senior managing director and global head of SPDR Exchange-Traded Funds at State Street Global Advisors. “With the launch of the SPDR BofA Merrill Lynch Crossover Corporate Bond ETF, precise, cost-efficient access to this asset class is within reach for investors seeking exposure that spans both investment grade and high-yield bonds.”
The index is designed to measure the performance of U.S. dollar-denominated emerging market corporate senior and secured debt publicly issued in the U.S. domestic market and the Eurobond market. Each security included in the index is denominated in US dollars, is senior or secured debt, has at least one year remaining to final maturity, includes a fixed coupon and has $500 million or more in outstanding face value. The fund’s expense ratio is 0.50%.
“The SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF provides investors with an opportunity to tap into the growth potential of emerging markets while minimizing exposure to emerging market currencies,” said Ross. “As fixed-income portfolio diversification becomes a higher priority for investors, interest in emerging market bond exposure is increasing.”