State Street Global Advisors on Thursday is expected to launch
that cater to very different investor needs-one of them a
short-dated TIPS fund that looks to offer protection against
inflation, and the other a global dividend ETF that sets out to
find high-yielding companies worldwide.
Overall, State Street's plans fit into two broad trends of the
past few years wherein investors have, on the one hand, looked for
sources of income away from the paltry returns in the traditional
U.S. bond market, but at the same time have remained concerned
about prospects for higher inflation ahead. Inflation has a very
corrosive impact on portfolio returns, especially fixed income.
Neither fund is a particularly new idea, but they expand State
Street's footprint into hot segments of the market.
The SPDR Barclays 1-10 Year TIPS ETF (NYSEArca:TIPX), which will
track the Barclays 1-10 Year Government Inflation-linked Bond
Index, will invest in Treasury inflation-protected securities that
have a maturity of less than 10 years and an issue size of at least
$500 million. TIPS are U.S. Treasury securities designed to provide
inflation protection, according to the filing.
TIPX will join other TIPS funds, including State Street's own
$737 million SPDR Barclays TIPS ETF (NYSEArca:IPE), which has an
average maturity of 9.67 years and a real adjusted duration of 8.67
years. Real adjusted duration is a measure of the percentage price
change of a TIPS security relative to the change in interest
IPE is serving up a 30-Day SEC yield of -0.13 percent and has an
annual expense ratio of 0.1845 percent.
Global Payout ETF
The SPDR S&P Global Dividend ETF (NYSEArca:WDIV) will track
the S&P Global Dividend Aristocrats Index, and invest in
high-yielding global companies included in the S&P Global BMI
Index that have a track record of stable or increasing dividends
for the last 10 consecutive years.
Securities must also meet requirements for float-adjusted
market-capitalization requirements-at least $1 billion-and
Diversification requirements also cap the number of securities
per country at 20 stocks, and at 35 per GICs sector. No single
security can represent more than 3 percent of the portfolio, and no
single country or sector can snag more than a quarter of the
overall mix, the filing said.
WDIV will compete with the WisdomTree Global Equity Income ETF
(NYSEArca:DEW), and the Guggenheim S&P Global Dividend
Opportunities ETF (NYSEArca:LVL)-which also picks names from
countries included in the S&P Global BMI Index. WDIV costs 0.58
percent a year, while LVL comes with a 0.60 percent price tag.
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