State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), will enhance its two high-yield bond ETFs–the SPDR Bloomberg Barclays High Yield Bond ETF (NYSEArca: JNK) and SPDR ICE BofAML Crossover Corporate Bond ETF (NYSEArca: CJNK).
As part of the changes, a 1:3 reverse share split will be implemented to reduce trading costs for JNK. In addition, CJNK will change its index strategy and name, and decrease its expense ratio by 25 basis points to provide investors with low cost, broad high-yield exposure.
“With over $400 billion in indexed fixed income assets and more than 100 fixed income professionals, we are a leader in fixed income investing. As such, we are continuously looking for opportunities to develop and refine solutions that better meet the needs of investors,” said Noel Archard, global head of SPDR product. “JNK’s increased share price will appeal to investors who favor its large trading volumes and optionality, and with CJNK’s lower expense ratio and new index strategy, we are able to offer diversified, low cost exposure to investors who view high yield as a strategic asset class in buy-and-hold portfolios.”
Reverse Share Split to Reduce Trading Costs
The 1:3 reverse share split for JNK raises its share price to approximately $105, helping to reduce trading costs for clients seeking liquid exposure to high yield bonds. The shares will trade at their post-reverse split price effective May 6, 2019.
As a result of the planned action, shareholders of JNK have the potential to hold fractional shares. Furthermore, the treatment of those shares will be dependent upon custodial relationships, with some shareholders receiving cash in lieu of fractional shares.
Lower Expense Ratio and New Index Strategy
Effective on April 1, 2019, the SPDR ICE BofAML Crossover Corporate Bond ETF will change its underlying index, fund name and net expense ratio as detailed below.
|Current Fund Name (Ticker)||Current Index||New Fund||New Index||Gross Expense Ratio||New Gross Expense Ratio||Share Price (No Change)|
|SPDR ICE BofAML Crossover Corporate Bond ETF (CJNK)||ICE BofAML US Diversified Crossover Corporate Index||SPDR ICE BofAML Broad High Yield Bond ETF (CJNK)||ICE BofAML US High Yield Index||0.40%||0.15%||$25.581|
State Street Global Advisors’ SPDR ETF offering now includes 140 US-listed SPDR ETFs representing over $601 billion in assets.
“As a matter of good business practice, we, at State Street Global Advisors, are always looking to identify improvements to our investment offerings that will enhance the success of our clients and ensure that together we are well-positioned for long-term growth,” SSG said in a FAQ document. “Similar to past product enhancements, these changes are aimed at ensuring our products are fit for purpose, are competitive in the marketplace and reflect how investors are using ETFs to create flexible, efficient and sophisticated portfolios to meet client needs.”
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