As investors look for ways to diversify a fixed-income portfolio, the bond exchange traded fund segment now offers an increasingly robust array of options to choose from.
“We have a massive fixed-income franchise ourselves – $400 billion in assets under management when it comes to index fixed-income, but we’ve also partnered with great firms like Double Line and GSO Blackstone to offer active solutions. So, I think we’ve got this really wonderful mix of both active and passive so that you can slice and dice that fixed-income market, and you no longer have to just look at the ‘Agg,'” Sue Thompson, Head of SPDR Americas Distribution, State Street Global Advisors, said at the Inside ETFs conference.
For example, State Street has come out with a suite of low-cost ETFs to help investors better manage risk and capture broad market exposure. Among their most popular fixed-income ETFs, the SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB) has $5.4 billion in assets under management and SPDR Portfolio Aggregate Bond ETF (SPAB) has $5.1 billion in assets.
Additionally, they have partnered with outside money managers to create actively managed ETFs. For instance, investors could complement existing credit positions in high-yield, and investment-grade credit with alternatives like bank loans that access floating rate, move up the capital structure, and shortens duration exposure. The actively managed SPDR Blackstone/GSO Senior Loan ETF (NYSEArca: SRLN) could help investors with better exposure as a manager is more freely able to weave in and out of the fixed-income market. Blackstone/GSO, which subadvisers SRLN, is backed by one of the largest senior loan asset managers in the world.
The SPDR DoubleLine Total Return Tactical ETF (NYSEArca: TOTL), which is an actively managed ETF backed by bond guru Jeff Gundlach and is seen as an ETF adaptation of the flagship DoubleLine Total Return Fund (DLTNX), may also act as a suitable alternative to the traditional Bloomberg Barclays U.S. Aggregate Bond Index.
Watch Sue Thompson Explain Fixed-Income Options:
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