State Street Debuts SPDR® Bloomberg Barclays 3-12 Month T-Bill ETF (BILS)

State Street Global Advisors debuted a new ETF on the New York Stock Exchange today: the SPDR® Bloomberg Barclays 3-12 Month T-Bill ETF (BILS).

Designed to give investors exposure to ultra-short term Treasury bills, this new SPDR ETF offering covers a maturity range between the SPDR® Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) and the SPDR® Portfolio Short Term Treasury ETF (SPTS).

Noel Archard, Global Head of SPDR Product at State Street Global Advisors, told ETF Trends that eliminating the securities under three months has the potential to provide increased yield without a significant increase in risk.

“This could be attractive to clients seeking the relative safety of treasury bills but concerned about the effects of extremely low rates resulting from the increased demand during COVID for ultra-short treasury securities,” he told ETF Trends. “Compared to its competitors, BILS maturities range from 3 to 12 months. Excluding the 0-3 month maturity range provides a slight uptick in yield and may increase the fund’s probability to pay a dividend. On the shorter end of the curve, T-bills tend to be more liquid than bonds and notes, with more frequent trading.”

He said the higher liquidity facilitates index replication, adding the higher liquidity may also result in lower trading costs for the underlying shareholders as new issues are added/mature out of the index.

Bloomberg Barclays 3-12 Month U.S. Treasury Bill Index

BILS seeks to track the performance of the Bloomberg Barclays 3-12 Month U.S. Treasury Bill Index, which includes all publicly issued U.S. Treasury Bills that have a remaining maturity of less than 12 months and at least 3 months. As of August 31, 2020, there were approximately 20 securities in the index.

State Street Global Advisors offers a broad suite of fixed income SPDR ETFs to help investors build custom portfolios to pursue their goals. This comprehensive lineup includes 33 funds with over $87 billion in assets providing exposure that ranges from corporate and credit to high yield and emerging market debt.

Archard told ETF Trends that with this launch they now have the ability to offer its clients exposure across the entire treasury maturity range, providing an additional ultra-short option for fine-tuning fixed income portfolios to meet specific yield, duration, and risk parameters.

“We offer three treasury funds as part of our SPDR Portfolio series, with maturity ranges of 1-3 years, 3-10 years, and 10+ years, and BIL, which focuses on 1-3 month T-bills,” he said. “This new fund will follow a similar approach to BIL. The index follows the same methodology but with longer maturities, and the fund will be run by the same portfolio management and trading team as BIL to ensure continuity.”

Evolving Needs of Global Investment Landscape

Steve Berkley, CEO of Bloomberg Index Services Limited (BISL), said at Bloomberg, they’re dedicated to providing index solutions that allow its clients to meet their evolving needs and address the changing global investment landscape.

“We are thrilled to work with State Street Global Advisors as they continue to build out their ETF suite, utilizing our indices as a strong foundation,” Berkley said.

Archard noted that State Street Global Advisors has 24 years of bond investing – its first fixed income index fund launched in 1996.

“As a matter of good business practice, we are always looking to improve our investment offerings, which are designed to enhance the success of our investors, and ensure that together, we are well positioned for long-term growth,” he said. “Similar to past lineup enhancements, these changes are aimed at ensuring our products are fit for purpose, competitive in the marketplace and reflective of how investors are using ETFs to create flexible, efficient and sophisticated portfolios to pursue their goals.”

He said BILS may help preserve capital and mitigate loss in an investor’s portfolio during periods of uncertainty.

“Under certain market conditions, such as those seen in March 2020, negative yields can occur on the shorter end of the Treasury curve,” he said. “Moving further out on the curve but remaining in the Ultra-Short space may alleviate the impact of negative yields for BILS. During times of heightened market uncertainty, we find investors tend to seek investments with durations on the shorter end of the curve.”

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