ETF Spotlight: Multi-Asset Real Return

August 17th at 9:11am by Tom Lydon

ETF Spotlight on the SPDR SSgA Multi-Asset Real Return ETF (NYSEArca: RLY), part of an ongoing series.

Assets: $7.5 million.

Objective: The SPDR SSgA Multi-Asset Real Return Fund is an an actively managed ETF that tries to generate real return through capital appreciation and current income. The fund may hold various exchange traded fund products to achieve its desired objective. [State Street Rolls Out First Active ETFs]

Holdings: Top holdings include the SPDR S&P Global Natural Resources ETF (NYSEArca: GNR) 29.1%, SPDR Barclays Capital TIPS ETF (NYSEArca: IPE) 12.2%, SPDR Dow Jones REIT ETF (NYSEArca: RWR) 12.1%, SPDR Dow Jones International Real Estate ETF (NYSEArca: RWX) 10.8% and Powershares DB Commodity Index Fund ETF (NYSEArca: DBC) 10.3%.

What You Should Know:

  • State Street Global Advisors sponsors the fund.
  • RLY has a 0.70% expense ratio.
  • The ETF holds 15 components and the top 10 make up 95.3% of the overall portfolio.
  • Asset class allocations include: natural resources 42.9%, real estate 22.9%, inflation-linked bonds 18.5% and commodities 15.7%.
  • The fund has a 1.69% 30-day SEC yield, and dividends are paid out quarterly.
  • RLY began trading on April 25.
  • The ETF is up 3.1% over the past month and up 4.4% over the last three months.
  • “RLY’s aim is to generate both current income and capital appreciation, striving to provide investors with a ‘real return,’ which is a rate of return above the rate of inflation over a market cycle,” according to Morningstar analyst Robert Goldsborough.
  • “RLY can make sense for smaller investors and advisors who are seeking a one-stop shop and who are not interested in managing multiple ETFs to gain protection from higher inflation and a weaker dollar,” Goldsborough added.
  • Investors will not see a noticeable impact from the inflation protection strategy as it can not provide added portfolio benefit over the course of a few months, writes Roger Nusbaum for The Street.
  • Inflation diminishes purchasing power over time, and the benefits of holding RLY would come from the long-term.

The Latest News:

  • The Bureau of Labor Statistics announced Wednesday that the inflation rate for all products was at 0% in July, reports Dylan Matthews for The Washington Post.
  • When excluding food and energy prices, the “core” inflation rate was 0.1% for the month.
  • In contrast, the inflation for the past year was 1.4% and the core inflation was 2.1%.
  • Observers are speculating that the low inflation would allow the Fed more room to implement monetary stimulus.
  • “The bigger worry is high unemployment,” said Ryan Sweet, a senior economist at Moody’s Analytics, said in a Reuters article. “Additional monetary easing is likely, but they are probably going to wait until later this year, possibly after the election (in November)”.

SPDR SSgA Multi-Asset Real Return ETF

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.