Whether you seek broad index or targeted exposure, bond ETFs offer diversification across numerous bond issues at a lower cost than their mutual fund peers.
US-listed fixed income ETF assets have grown at an annualized rate of about 33% since 2002 to reach $1.58 trillion.1 What’s driving this significant growth? Easy access to market segments where purchasing individual bonds can be prohibitively expensive. Strong liquidity that supports trading flexibility. And, maybe most importantly, lower fund fees.
In fact, every SPDR® bond ETF costs less than its mutual fund peer:
The range of low-cost fixed income SPDR ETFs provides easy exposure to various maturities, credit qualities, sectors, geographies, and currencies — enabling you to easily and cost-efficiently build core bond portfolios.
The low-cost core SPDR® Portfolio ETFs™ suite — with over $208 billion in assets — offers:
You can use low-cost SPDR Portfolio fixed income ETFs to rebuild the traditional Bloomberg US Aggregate Bond Index by making tactical overweights and underweights, so that you can optimize for specific yield and duration preferences.
The SPDR® Portfolio low-cost Treasury suite provides cost-efficient exposure to nominal US Treasurys across various maturity bands. These exposures offer you the ability to position along the yield curve to tailor portfolio risk and income characteristics.
The SPDR® Portfolio corporate bond suite provides low-cost exposure to broad investment grade corporate bonds across segmented maturity bands. These exposures allow you to position along the corporate credit curve to tailor portfolio risk and income characteristics.
The SPDR® Portfolio Mortgage Backed Bond ETF (SPMB) is a low-cost ETF that provides exposure to agency mortgage-backed securities of the US investment grade bond market. Mutual fund competitors cost 14x what SPMB does, as shown below.
Ancillary bond segments, such as emerging market debt or senior loans, can provide potential benefits to investors who find mortgages, Treasurys, and corporates to be too narrow to meet their objectives without overconcentrating the portfolio in any one sector.
To seek income and modulate credit risk across a variety of exposures, you can adjust your allocation with SPDR fixed income ETFs.
SPDR’s municipal bond suite is managed by Nuveen, a leading municipal bond investment manager with 125 years of asset management experience.9 You can use the SPDR municipal bond suite to seek income without overextending on credit risk, while also improving the tax efficiency of your fixed income allocation — all at a lower cost relative to owning single issues or mutual funds.
SPDR works in partnership with renowned active fixed income managers like DoubleLine, Blackstone Credit, Nuveen, and Loomis Sayles to offer investors access to a range of skilled active portfolio managers. As shown below, in most cases, SPDR’s active core and non-aggregate bond strategies cost less than comparable mutual funds.
Of course, it’s important to consider the total cost of ownership (TCO) — the expense ratio plus trading and holding costs — for any investment.
And in addition to reducing operating costs, which lowers your fees, ETFs’ unique creation and redemption process also works to reduce TCO.
SPDR bond ETFs are built and powered by the same expertise and resources that have made State Street Global Advisors one of the world’s leading fixed income institutional managers and a pioneer in ETF investing.
Our 26 years of experience managing bonds, and $576 billion in fixed income assets under management,11 should help investors feel confident looking to us for potential investment solutions, including:
Against the macro backdrop of elevated market volatility and persistent inflation, we expect strong flows into low-cost, tax-efficient ETFs to continue.
And as the benefits of ETFs are more broadly explored, they should continue to increase in number and variety, creating even more opportunities for today’s investors.