State Street Global Advisors has launched a new exchange traded fund (ETF) they’re saying is the longest-term bond ETF available, with maturities 10 years or more.
The SPDR Barclays Capital Long Term Credit Bond ETF (LWC) was created in light of wide spreads in current long-term credit yields compared to U.S. Treasury securities, which makes the credit sector quite enticing. It will also have added benefits of ETF investing such as transparency, liquidity and cost efficiency.
The underlying index is the Barclays Capital U.S. Long Credit Index. This Index shows the performance of the long-term U.S. investment bond market sector, which includes investment-grade corporate debt and sovereign, supranational, local authority, and non-U.S. agency bonds that are dollar-denominated with remaining maturities of 10+ years. The average maturity entering 2009 is 24.39 years.
LWC will have an expense ratio of 0.15% and 968 holdings. Top sectors include: industrial, 52.2%; financial institutions, 19.2%; utility, 13.6%; sovereign, 7.7%; local authority, 5.6%; agency, 1%; supranational, 0.9%.
All told, there are six other long-term bonds on the market, IndexUniverse staff notes. They focus on Treasuries, however, and aren’t as diversified as LWC or its closest competitor, the Vanguard Long-Term Bond (BLV). BLV has an average maturity of 20.8 years heading into February.
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.