State Street Adds Muni Bond ETF

September 14, 2007

SAN DIEGO (ETFguide.com) -  Just three short days after Barclays Global Investors (BGI) introduced the first muni bond exchange-traded fund (ETF), State Street Global Advisors (SSgA) has followed.

This week the Boston, MA-based investment firm introduced the SPDR Lehman Municipal Bond ETF (Ticker: TFI) on the American Stock Exchange.

The fund charges an annual expense ratio of 0.20 percent and it will track the Lehman Brothers Municipal Managed Money Index.

All bonds in the index must have a minimum credit rating of Aa3/AA or higher by at least two of the following statistical ratings agencies: Moody's, S&P, and Fitch.

Bonds subject to Federal alternative minimum tax, hospital bonds, housing bonds, tobacco bonds, and airline bonds, along with remarketed issues, taxable municipal bonds, floaters, and derivatives are all excluded.

With regard to duration, bonds in the index must be fixed rate, have been issued within the last five years, and must be at least one year from their maturity date.

Geographically, top states represented in the Lehman index are New York (14.92 percent), California (14.63 percent), Texas (8.49 percent), and Florida (5.72 percent).

Earlier in the year, State Street launched five bond ETFs based upon one Barclays and four Lehman bond indices.
 

"Our new family of fixed income SPDRs is designed to help investors create and manage well-diversified, cost-effective portfolios," said Anthony Rochte, senior managing director of State Street Global Advisors.
 

Including this week's launch, State Street currently manages more than $100 billion in 60 U.S. listed ETFs.