The new funds allow investors greater freedom in selecting which segments of the yield curve they wish to hold.
SSGA said this flexibility was expected to be in greater demand now the US Federal Reserve is moving to tighten monetary policy, “as choosing whether to invest across the entire yield curve or only in certain segments can have a notable impact on portfolio returns””
By example SSGA said, from 1995 – 2015 the Barclays US Treasury index returned 217%, but with significant variability across the curve; the 1-3 year index returned 125%, while the 10-year plus index returned 410%. A similar pattern was also observed in the eurozone government bond market.
Low cost appeal
Alexis Marinof, EMEA head of SPDR ETFs said: “We are in a ‘lower for longer’ economic environment with low growth, subdued inflation, and limited global policy tightening all on the cards. In addition to this, regulatory requirements continue to drive cost pressures.
“Against this backdrop, investors understandably remain focused on seeking ways to make their portfolios as efficient as possible, and low cost, easy-to-use ETFs are the natural choice.
“These latest launches support their demand for low cost solutions for their core portfolio.”
After strong growth in 2015, ETFs providing exposure to fixed income securities gathered the largest net inflows in January with $12.5bn (£8.7bn, €11.2bn), according to the latest data from ETFGI, an independent research and consultancy firm.
Investors generally favoured safe haven developed market government bond ETFs/ETPs with net inflows of $10.6bn, followed by broad/aggregate bond exposure with $1.7bn, while emerging market bond ETFs experienced the largest net outflows with $950m.
These are the new ETFs: