State Street Global Advisors, the company behind the SPDR ETFs,
filed papers with U.S. regulators to market two fixed-income
ETFs:one that would track the breakeven inflation rate in the U.S.
through a long/short portfolio, the other a commercial paper
The SPDR Barclays Capital Breakeven Inflation ETF will replicate
the Barclays Capital U.S. Breakeven Inflation Aggregate Index and
capture the returns of long positions in U.S. Treasury
inflation-protected securities (
) while simultaneously holding short positions in corresponding
nominal U.S. Treasury bonds.
The long TIPS/short U.S. Treasurys portfolio will allow
investors to track breakeven inflation, which is the level of
inflation required for TIPS to approximate the performance of U.S.
Treasurys with equivalent duration. Breakeven rates of inflation
are a measure of the marketâs expectations for inflation over a
ETFs that serve up tools with which to manage inflation have
resonated with investors, whose concerns over inflation continue to
mount as the U.S. struggles to emerge from the worst economic
downturn it has seen since the 1930s. Significant U.S. deficit
spending has many on edge about the prospects for inflation
Funds like the $22 billion iShares Barclays TIPS Fund
(NYSEArca:TIP)âcurrently the U.S. marketâs largest fixed-income
ETFâhave been popular with investors who are looking for ways to
protect capital against inflation. SSgA also has a TIPS ETF, the
SPDR Barclays Capital TIPS (NYSEArca:IPE), with assets of more than
The new fund, which the filing says aims to minimize exposure to
real yields by scaling the short position âappropriatelyâ while
still capturing inflation-linked returns, would go against the
likes of a roster of ProShares ETFs that are also under
registration with the Securities and Exchange Commission.
The ProShares funds, while leveraged, are also built around a
long TIPS/short Treasurys strategy.
Commercial Paper ETF
The SPDR S'P Commercial Paper Ex-Financials ETF will replicate
through sampling an S'P benchmark that tracks the 1-3 month sector
of the U.S. nonfinancial commercial paper market in a strategy
similar to money market mutual funds.
The index, which screens for issuers with program sizes greater
than $2 billion, is weighted on a tiered basis that assigns the
most weight to the largest issuerâs program.
âSpecifically, commercial paper of issuers with a maximum
program size ranging from $5 billion to $15 billion will have twice
the weight in the index as that of issuers with a maximum program
size ranging from $2 billion to $5 billion,â the company said in
the filing. Similarly, those exceeding $15 billion will weigh three
times as much as the smallest issuers.
The index rebalances monthly.
No ticker or fees were disclosed in the filing.
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