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State Street Plans Int’l Corporate Bond ETF
By Olivier Ludwig | March 08, 2010 4:55 am


State Street Global Advisors, the world’s second-biggest ETF firm, filed with the Securities and Exchange Commission to launch an international investment-grade corporate bond ETF, the first of its kind in a growing array of fixed-income ETFs.

The SPDR Barclays Capital International Corporate Bond ETF will be listed on NYSEArca, and will trade under the symbol “IBND,” the Boston-based company said in the filing, dated March 5. IBND will be based on the Barclays Capital Global Aggregate ex-USD >$1B: Corporate Bond Index.

The fixed-income portion of the ETF world has been growing recently as investors seek securities with attractive yields, increasingly outside the U.S. Last week, New York-based Van Eck filed to launch a nondollar-denominated emerging market debt ETF, also a first. Official U.S. interest rates are close to zero after the Federal Reserve cut rates aggressively to stimulate an economy that is in its worst crisis since the 1930s.

The ETF employs a sampling strategy that doesn’t require it to buy all the securities in the underlying index.

At least 80 percent of the securities in the fund will have to be part of the index or judged to be similar. But under normal market conditions, all the securities the ETF holds are likely to reflect the index, the filing said.

IBND will also be allowed to invest in securities that aren’t included in the index, such as futures, options, swap contracts and other derivatives, cash and cash equivalents or money market instruments.

State Street didn’t disclose the ETF’s annual expense fee.

 

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