State Street Debuts Credit Bond ETF

February 11, 2009

SAN DIEGO (ETFguide.com) – Adding to a string of new exchange-traded fund launches, State Street Global Advisors has just introduced the SPDR Barclays Capital Intermediate Term Credit Bond ETF (NYSEArca: ITR). 

“With current yield spreads edging wider than they have been in more than 15 years, investment-grade corporate bonds are an attractive asset classes for investors seeking to further diversify their fixed income holdings or hedge against future interest-rate hikes,” stated James Ross, senior managing director at State Street Global Advisors.  

The fund’s underlying index includes investment grade corporate and non-corporate credit bonds that are dollar denominated and have a remaining maturity of greater than or equal to 1 year and less than 10 years. As of December 31, 2008, the index included 2,512 issues with an average credit rating of A and dollar-weighted maturity of 5.20 years.

Explaining the offering Ross said, “ITR was developed in response to increasing demand from investors seeking access to intermediate credit securities, a segment of the fixed-income market that has historically offered higher yields than U.S. Treasuries.”

ITR’s annual expense ratio is 0.15 percent and including its launch, State Street now manages 15 bond ETFs.

In related news, the South American country of Columbia is renowned for its fine coffee and addictive salsa music. And now, investors can participate in another facet of Columbia – its stock market. 

New York-based Global X Management Company has just introduced the GlobalX/InterBolsa FTSE Columbia ETF (NYSEArca: GXG). The fund charges annual expenses of 0.86% and is the first U.S. listed ETF to target this tropical nation. 

Popular ETFs that target South American stocks like the iShares S&P Latin America 40 Index Fund (NYSEArca: ILF) and the SPDR S&P Emerging Latin America ETF (NYSEArca: GML) do not contain market exposure to Columbian stocks. ILF and GML both have Brazil, Mexico, and Chile as their largest country positions. 

The underlying index for GXG follows a basket of 20 Columbian stocks which are selected for their high liquidity. After stocks have been passively selected they’re weighted according to their market capitalization. (See ETFguide’s Index Strategy Map below for visual explanation.) Top companies inside the index include oil firm Ecopetrol, banking group Bancolombia, and cement producer Cementos Argos. The index is maintained by the FTSE Group.  

In November, Global X filed registration with the Securities and Exchange Commission for ETFs targeting Argentina, Egypt, Peru, and the Philippines.

--Index Strategy Map for Global X/InterBolsa FTSE Columbia ETF (GXG) 

Source: ETFguide.com