State Street Global Advisors has launched two new exchange traded funds aimed at fixed income investors looking to manage ongoing bond market uncertainty. The SPDR DoubleLine Short Duration Total Return Tactical ETF (Bats: STOT) and SPDR DoubleLine Emerging Markets Fixed Income ETF (Bats: EMTL) provide investors with exposure to US short maturity bonds and emerging market bonds, respectively.
James Ross, executive vice president and global head of SPDR Exchange Traded Funds.
Sub-advised by Jeffrey Gundlach’s DoubleLine Capital, the funds seek to maximise total return through active mandates that allow for the over- and under- weighting of sectors where the manager holds a particular view and the selection of securities outside of the fund’s benchmark indices.
“Our clients have been asking us for solutions to help them navigate ongoing bond market uncertainty,” said James Ross, executive vice president and global head of SPDR Exchange Traded Funds at SSGA. “We’re pleased to be expanding our relationship with DoubleLine to seek to help clients address this challenge. These additions to the SPDR line-up provide investors with new actively managed fixed income ETFs that may be able to help strengthen and complement core bond holdings.”
The SPDR DoubleLine Short Duration Total Return Tactical ETF seeks to maximize current income with a dollar-weighted average effective duration between one and three years. The ETF is managed by Jeffrey Gundlach, Chief Executive Officer and Chief Investment Officer of DoubleLine Capital, Philip Barach, DoubleLine President and Jeffrey Sherman. The benchmark for the fund is the Barclays US Aggregate 1-3 Year Index.
The fund aims to maximize total return through active selections of US government securities, foreign and domestic corporate bonds, emerging market bonds and agency and non-agency mortgage backed securities. An annual fee of 0.45% applies due to a contractual waiver in place until November 2017, after which the total expense ratio of 0.50% may apply.
As of 13 April 2016, the fund’s index has a yield-to-maturity of 1.11% and a modified adjusted duration of 1.84 years. The main sector allocations are to Treasuries (56.5%), corporate – industrials (12.9%), corporate – finance (9.8%), and agency (7.1%). The breakdown of credit quality within the index is Aaa (71.1%), Aa (7.1%), A (11.6%) and Baa (10.2%).
The SPDR DoubleLine Emerging Markets Fixed Income ETF looks to provide high total return from current income and capital appreciation. The fund is managed by Luz Padilla, Director of DoubleLine’s International Markets Fixed Income Team, Mark Christensen and Su Fei Koo. The benchmark for the fund is the JP Morgan Corporate Emerging Market Bond Index Broad Diversified.
The fund will maintain a weighted average effective duration between two and eight years through active security selection that combines bottom-up research with sovereign macro overlays. An annual fee of 0.65% applies due to a contractual waiver in place until November 2017, after which the total expense ratio of 0.65% may apply.
As of 13 April 2016, the yield-to-maturity of the index is 5.34% and the modified adjusted duration is 4.69 years. The main sector allocations are in corporate – industrial (42.2%), non corporates (30.7%), and corporate – finance (23.0%). The credit quality breakdown of the index is to A (19.2%), Baa (39.9%) and below Baa (37.1%)
The new ETFs build on the success of the SPDR DoubleLine Total Return Tactical ETF (TOTL), launched in February 2015. The fund was the fastest growing ETF launched last year, attracting over $1.7bn during its first ten months. Net assets under management in the SPDR DoubleLine Total Return Tactical ETF totalled over $2.2bn as of 31 March 2016.
“The pioneer of ETFs was the obvious choice when we partnered with State Street to launch the first DoubleLine-managed intermediate-term bond ETF,” added Gundlach. “With TOTL having recently marked its first anniversary, now is an appropriate time for our two firms to make DoubleLine’s low duration and emerging markets expertise available to ETF investors.”