State Street Adds Two Bond Index ETFs to its Lineup January 28, 2009
SAN DIEGO (ETFguide.com) - State Street Global Advisors (SSgA), the investment management arm of State Street Corporation (NYSE: STT), announced the launch of the SPDR Barclays Capital Short Term International Treasury Bond Index ETF (NYSEArca: BWZ) and the SPDR Barclays Capital Mortgage Backed Bond Index ETF (NYSEArca: MBG).
Both funds will grow
State Street's lineup of bond ETFs to 14.
"Recent market volatility has increased demand for fixed income ETFs that provide efficient and cost-effective exposure to markets that help investors enhance the diversification of their fixed income holdings," said James Ross, senior managing director at State Street Global Advisors.
BWZ is designed to track the price and yield performance of the Barclays Capital 1-3 Year Global Treasury ex-US Capped Index. As of December 31, 2008, the Index included 229 ETF holdings with remaining maturities of one to three years from 21 investment-grade countries outside of the
United States. The fund's annual expense ratio is 0.35 percent.
"This Spider ETF expands our offerings in the burgeoning international bond category and provides investors with a new tool to add non-U.S. fixed income exposure to their portfolios, benefit from favorable interest rates overseas, and express a view on the [
U.S.] dollar," Ross continued.
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MBG is designed to track the price and yield of the Barclays Capital U.S. MBS Index which measures the performance of the
U.S. agency mortgage pass-through segment within the
U.S. investment grade bond market. As of December 31, 2008, the Index included 1,727 issues and an average credit quality rating of AAA/Aaa. The fund's annual expense ratio is 0.20 percent.
Both SPDR bond ETFs use a passive strategy for selecting securities and a traditional market weighted methodology.
State Street is building on its track record of successful bond ETF offerings.
During the second half of 2007, the company unveiled the first international bond ETF which also happens to be of the fast growing fixed income ETFs on the market. The SPDR Barclays Capital International Treasury Bond ETF (NYSEArca: BWX) has approximately $906 million in assets under management.
At the end of 2008,
State Street's
U.S. assets under management for SPDR ETFs totaled more than $159 billion.
In related news, Claymore Securities launched the Claymore/NYSE Arca Airline ETF (NYSE Arca: FAA). The fund follows the NYSE Arca Global Airline Index and it has exposure to 25 stocks within the global airline sector.
Each stock within FAA's underlying index is selected passively and assigned a modified equal-dollar weighting which is determined by the liquidity and size of the company. (See Index Strategy Map below for visual explanation.) The index is rebalanced on a quarterly basis.
Continental Airlines (14.75%), Southwest Airlines (11.78%) and AMR Corp.(11.07%) are among the fund's three largest holdings. The fund charges annual expenses of 0.65%.
Claymore currently manages 34 stock and bond ETFs with around $949 million in combined assets.
--ETFguide's Index Strategy Map for FAA
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