On the heels of the success of the newly minted SPDR DoubleLine Total Return Tactical ETF (NYSEArca: TOTL), State Street’s (NYSE: STT) State Street Global Advisors (SSgA) unit is looking to bolster its presence in the fixed income ETF space and that effort could include more relationships with well-known bond fund managers.
In an interview with Tim McLaughlin of Reuters, SSgA head Ron O’Hanley said fixed income as an area he intends to spend more time on.
In collaboration with Jeff Gundlach’s DoubleLine Capital, SSgA launched the actively managed TOTL in late February. The debut of TOTL marked Gundlach’s initial foray into the ETF space and the fund has thus far proven successful, amassing nearly $240 million in assets under management in less than two months of trading, according to State Street data.
TOTL managed with a top-down macroeconomic process, offers investors exposure to multiple fixed income asset classes using a bottom-up security selection methodology. Half of TOTL’s initial portfolio is comprised of U.S. government debt as part of the new ETF’s duration management effort while the rest of the portfolio includes investment-grade and high-yield corporate as well as dollar-denominated emerging markets debt, among other bonds, as part of TOTL’s credit risk management process. [Gundlach ETF Debuts]
TOTL combines traditional fixed income investment sectors of the Barclays US Aggregate Bond Index and fixed income asset classes outside the index with the goal of maximizing total return over a full market cycle through active sector allocation and security selection. DoubleLine will strive to maintain TOTL’s portfolio investments with a shorter duration than that of the Barclays US Aggregate Bond Index. Duration is a measure of the sensitivity of the price of a fixed income investment to a change in interest rates expressed as a number of years, according to a statement issued by State Street Global Advisors.
SSgA’s effort to strengthen its fixed income ETF offerings could include “collaborating with well-known active fund managers,” according to Reuters. The Reuters article did not mention specific bond fund managers that SSgA could partner with.