State Street adds two SPDR bond funds positioned for rising rates

By Susanna Moon

Chicago, Dec. 1 - State Street Global Advisors said that the SPDR Barclays Capital Short Term Treasury exchange-traded fund and the SPDR Barclays Capital Investment Grade Floating Rate ETF began trading on the NYSE Arca on Thursday.

The short-term Treasury fund is the first ETF to track the performance of the Barclays Capital 1-5 Year U.S. Treasury index. The index includes all publicly issued U.S. Treasury securities that have a remaining maturity of between one and five years, are rated investment grade and have at least $250 million of outstanding face value, according to a press release by State Street Corp., a Boston-based financial services provider. State Street Global Advisors is the investment management arm.

As of Nov. 18, there were about 114 securities included in the index with an average maturity of 2.8 years. The SPDR Barclays Capital Short Term Treasury ETF's expense ratio is 0.12%.

"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," James Ross, senior managing director and global head of SPDR ETFs at State Street Global Advisors, said in the release.

The SPDR Barclays Capital Investment Grade Floating Rate ETF tracks the performance of the Barclays Capital U.S. Dollar Floating Rate Note < 5 Years index. The Index includes dollar-denominated investment-grade floating-rate notes that have a remaining maturity of one month to five years and have $300 million or more of outstanding face value.

As of Nov. 18, there were about 320 securities in the index with an average maturity of 1.71 years. The SPDR Barclays Capital Investment Grade Floating Rate ETF's expense ratio is 0.15%.

Ross noted that, "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."

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