State Street Global Advisors (SSGA) has launched a new actively managed bond ETF that seeks to outperform over a full market cycle by capturing credit risk premiums across multiple bond sectors.
The SPDR Loomis Sayles Opportunistic Bond ETF (OBND US) has been registered on Cboe BZX exchange and comes with an expense ratio of 0.55%.
Sue Thompson, Head of SPDR Americas Distribution at SSGA, said: “The low interest rate environment is driving demand for non-traditional fixed income investments. OBND seeks to meet the needs of investors for yield and diversification while offering the benefits of active risk management.
The fund, which starts with $ 30 million in assets, is under-advised by the Alpha Strategies division at Loomis Sayles, US subsidiary of French asset manager Natixis Investment Managers.
The team is led by Kevin Kearns, co-manager of multi-asset credit and income strategies, and supported by portfolio managers Andrea DiCenso and Thomas Stolberg.
The fund may invest in a wide variety of fixed income securities, including sovereign and quasi-sovereign debt securities, inflation-protected treasury bills, corporate bonds, mortgage-backed securities, asset-backed securities, secured debt securities, repurchase agreements, structured notes, bank loans, preferred securities, convertible preferred securities and contingent convertible securities (CoCo). Eligible issues can be fixed, variable, floating, adjustable or zero coupon.
The fund may also use a wide range of derivative instruments on securities, indices, currencies or interest rates for hedging or investment purposes.
The fund is not limited in its holdings of lower quality rated debt, while up to 10% of portfolio assets may be allocated to securities denominated in currencies other than the US dollar. These assets not denominated in US dollars will be hedged against currency risk.
Under normal market conditions, the fund managers seek to maintain a weighted average portfolio duration of less than seven years.
Sector allocation is determined using a top-down credit cycle approach supported by in-depth fundamental research informed by macroeconomic, asset class and industry analysis based on real-time market data , economic publications and trading models, coupled with Loomis Sayles’ quantitative economic analysis. and market cycle identification models.
Kevin Kearns said, “As a team, we are passionate about combining what we believe to be best-in-class fundamental and advanced quantitative research with cutting-edge technology to help achieve our clients’ goals. We are excited to join SSGA’s distinguished SPDR franchise with OBND, which is an innovative solution for credit investors.