Build America Bonds aren’t just a popular way to fund the American recovery; they also make for popular exchange traded funds (ETFs). With that, State Street is out with a new fund to give investors another way to play them.

SPDR Nuveen Barclays Capital  Build America Bond (NYSEArca: BABS) is another option for investors looking for exposure to the Build America Bond space. Oliver Ludwig for Index Universe reports that this is the first fund developed by State Street and Nuveen under a subadvisory agreement. It comes with a 0.35% expense ratio. [Why Bonds Work to Quell Inflation Worries.]

Build America Bonds were launched in April 2009 as part of the Obama administration’s economic stimulus package. Interest payments are subsidized by the U.S. Treasury, making them attractive to cash-strapped municipalities and states. Yields are comparable to those found in corporate bonds.[Safeguard Your Money in Crazy Markets.]

The ETF will track the to the price and yield performance of the Barclays Capital Build America Bond Index, an index that tracks the market for taxable municipal securities and to which the issuer is to designate the bonds as “Qualified Bonds” under the Build America Bond program, according to the fact sheet.

PowerShares also has a Build America Bond ETF: PowerShares Build America Bond Portfolio (NYSEArca: BAB), which launched last November. Since then, it has amassed close to $300 million in assets. PIMCO is also planning to launch an actively managed Build America Bond fund, but there are no details regarding when that will happen.

For more stories about bonds, visit our Bond ETF category.

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.