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SSgA Drafts Floating-Rate ETF Plans

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State Street Global Advisors, the company behind the world’s two-biggest ETFs, filed paperwork with the Securities and Exchange Commission to market a floating-rate ETF, bringing SSgA up to speed with a broad trend in the exchange-traded funds world involving some of the ETF industry’s biggest names.

The SPDR Barclays Capital Investment Grade Floating Rate ETF will be designed around a benchmark that tracks an index of U.S.-dollar-denominated, investment-grade floating-rate notes with maturities greater than or equal to one month and less than five years, according to the filing.

The focus on investment-grade debt appears to put the SSgA product on par with the Market Vectors Investment Grade Floating Rate ETF (NYSEArca:FLTR) from Van Eck, which has gathered $9.6 million since its launch in the spring. Indeed, floating-rate bonds are often linked to borrowers that are highly leveraged, as they are issued for recapitalization needs and acquisitions, such as leveraged buyouts.

The floating-rate debt ETF trend began in earnest in early March with the launch of the PowerShares Senior Loan Portfolio (NYSEArca:BKLN). BKLN, which has gathered almost $160 million, holds noninvestment-grade bank loans.

After Van Eck’s FLTR, San Francisco-based iShares followed with the iShares Floating Rate Note Fund (NYSEArca:FLOT), which has gathered $64.2 million.

SSgA didn’t say what the floating-rate ETF’s ticker would be or what its annual expense ratio would be.

SSgA is the fund sponsor behind the nearly $93 billion SPDR S'P 500 ETF (NYSEArca:SPY) and the $72 billion physical bullion ETF, the SPDR Gold Shares (NYSEArca:GLD).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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