State Street Global Advisors (SSGA), begun trading 2 new ETFs, the SPDR DoubleLine Emerging Markets Fixed Income ETF (BATS: EMTL) and the SPDR DoubleLine Short Duration Total Return Tactical ETF (BATS: STOT) on Thursday, April 14, 2016.
Here is a synopsis of the new ETFs:
1.
FUND INFORMATION:
| Symbol: EMTL | Exchange: BATS |
| Name: SPDR DoubleLine Emerging Markets Fixed Income ETF | Net Expense Ratio: 0.65% |
FUND OBJECTIVE:
The SPDR DoubleLine Emerging Markets Fixed Income ETF is an actively managed fund which seeks to provide high total return from current income and capital appreciation.
Under normal circumstances, the Fund will invest at least 80% of its net assets (plus the amount of borrowings for investment purposes) in emerging market fixed income securities.
Fixed income securities are defined as fixed income securities issued or guaranteed by foreign corporations or foreign governments, including securities issued or guaranteed by companies (including hybrid securities), financial institutions, or government entities in emerging market countries; corporate or government bonds; sovereign debt; structured securities; foreign currency transactions; certain derivatives; preferred securities; zero coupon bonds; credit-linked notes; pass through notes; bank loans; and perpetual maturity bonds. Fixed income securities may have fixed or variable interest rates and any maturity. The Fund may also invest in exchange-traded foreign equity securities and depositary receipts. The Fund will generally invest in securities and/or instruments from at least 5 emerging market countries, with no more than 20% allocated to a single country.
The Fund may invest in fixed income securities of any credit quality, but seeks to invest no more than 20%, at the time of investment, in fixed income securities that are unrated, rated BB+ or lower by Standard & Poor’s Rating Service or Ba1 or lower by Moody’s Investor Service, Inc. or the equivalent by any other nationally recognized statistical rating organization. Corporate bonds and certain other fixed income securities rated below investment grade, or such instruments that are unrated and are determined by the Sub-Adviser to be of comparable quality, are high yield, high risk bonds, commonly known as junk bonds. The Fund may
invest in hybrid securities relating to emerging market countries. A hybrid security may be created by combining an income-producing debt security and the right to receive payment based on the change in the price of an equity security.
The Fund may conduct foreign currency transactions on a spot (i.e., cash) or forward basis (i.e., by entering into forward contracts to purchase or sell foreign currencies). The Fund may also invest in the following derivatives: foreign currency futures; credit default swaps; and options, swaps, futures, and forward contracts on securities. These practices may be used to hedge the Fund’s portfolio (e.g., to hedge against currency fluctuations), as well as for investment purposes (e.g., to gain exposure to certain issuers or emerging markets); however, such practices sometimes may reduce returns or increase volatility. All such derivatives will be exchange traded or centrally cleared.
In managing the Fund’s investments, under normal market conditions, . DoubleLine Capital LP (Sub-Adviser) intends to seek to construct an investment portfolio with a weighted average effective duration of no less than 2 years and no more than 8 years.
The effective duration of the Fund’s investment portfolio may vary materially from its target, from time to time, and there is no assurance that the effective duration of the Fund’s investment portfolio will not exceed its target. The Fund may invest without limit in investments denominated in any currency, but expects to invest a portion of its assets in investments denominated in the U.S. dollar. Securities held by the Fund may be sold at any time. By way of example, sales may occur when the Sub-Adviser perceives deterioration in the credit fundamentals of the issuer, when the Sub-Adviser believes there are negative macro geo-political considerations that may affect the issuer, when the Sub-Adviser determines to take advantage of a better investment opportunity, or the individual security has reached the Sub-Adviser’s sell target.
Fund’s Top 10 Holdings (04/14/16):
| DELEK & AVNER TAMAR BD 4.435 12/30/2020 | 5.74% |
| ISRAEL ELECTRIC CORP LTD 5.625 06/21/2018 | 5.35% |
| BANCO SANTANDER MEXICO 5.95 01/30/2024 | 5.24% |
| HUTCH WHAMPOA INT 12 II 3.25 11/08/2022 | 5.21% |
| ABENGOA TRANSMISION SUR 6.875 04/30/2043 | 5.19% |
| LIMA METRO LINE 2 FIN LT 5.875 07/05/2034 | 5.17% |
| TENCENT HOLDINGS LTD 2.875 02/11/2020 | 5.11% |
| BANCO NACIONAL COMERCIO 4.375 10/14/2025 | 5.10% |
| BBVA BANCOMER SA 6.008 05/17/2022 | 5.09% |
| GLOBAL BANK CORPORATION 5.125 10/30/2019 | 5.09% |
Fund’s Region Allocation (04/14/16):
| South America | 41.82% |
| Central America | 36.77% |
| Middle East | 11.10% |
| East Asia | 10.31% |
Fund’s Country Weights (04/14/16):
| Mexico | 27.07% |
| Peru | 19.59% |
| Colombia | 13.08% |
| Israel | 11.10% |
| Panama | 8.43% |
| Brazil | 7.78% |
| Hong Kong | 5.21% |
| China | 5.11% |
| Chile | 1.37% |
| Costa Rica | 1.27% |
Useful Links:
EMTL Home Page
Category:
2.
FUND INFORMATION:
| Symbol: STOT | Exchange: BATS |
| Name: SPDR DoubleLine Short Duration Total Return Tactical ETF | Net Expense Ratio: 0.45% |
FUND OBJECTIVE:
The SPDR DoubleLine Short Duration Total Return Tactical ETF is an actively managed fund which seeks to maximize current income with a dollar-weighted average effective duration between 1 and 3 years.
Under normal circumstances, DoubleLine Capital LP (Sub-Adviser) will invest at least 80% of the Fund’s net assets (plus the amount of borrowings for investment purposes) in a diversified portfolio of fixed income securities of any credit quality (subject to certain limits described below).
Fixed income securities in which the Fund principally invests are defined as securities issued or guaranteed by the U.S. government or its agencies, instrumentalities or sponsored corporations; inflation protected public obligations of the U.S. Treasury (TIPS); securities issued or guaranteed by state or local governments or their agencies or instrumentalities (municipal bonds) (the Fund may invest up to 20% of its portfolio in municipal bonds); asset-backed securities (ABS) (which include the following: agency and non-agency residential mortgage-backed securities (RMBS), agency and non-agency commercial mortgage-backed securities (CMBS), and any other agency and nonagency asset-backed securities (NAABS)); collateralized debt obligations (CDOs); collateralized loan obligations (CLOs); collateralized bond obligations (CBOs); collateralized mortgage obligations (CMOs); and Real Estate Mortgage Investment Conduits (REMICs) and Re-REMICs (which are REMICs that have been resecuritized); stripped securities (i.e., interest rate only and principal only securities); zero coupon securities; foreign (including emerging markets) and domestic corporate bonds; sovereign debt; bank loans; preferred securities; and exchange-traded products, including exchange-traded funds and exchange traded notes, that invest in fixed income securities. To the extent applicable, debt instruments that comprise fixed income securities may be either fixed rate securities, floating rate securities, or variable rate securities. The Fund may also invest in cash and other short-term instruments, as well as restricted securities.
The Fund intends to invest at least 25% of its net assets in mortgage-backed securities of any maturity or type guaranteed by, or secured by collateral that is guaranteed by, the U.S. government, its agencies, instrumentalities or sponsored corporations. The Fund also may invest in privately issued mortgage-backed securities of any rating assigned by Moody’s Investor Service, Inc. or by Standard & Poor’s Rating Service or assigned by any other nationally recognized statistical rating organization (NRSRO) or in unrated securities that are determined by the Sub-Adviser to be of comparable quality. The Fund may invest up to 20% of its net assets in the aggregate in non-agency ABS. The Fund may invest a substantial portion of its assets in U.S. agency mortgage pass-through securities. The term “U.S. agency mortgage pass-through security” refers to a category of pass-through securities backed by pools of mortgages and issued by one of several U.S. Government-sponsored enterprises: Ginnie Mae, Fannie Mae or Freddie Mac. The Fund may seek to obtain exposure to U.S. agency mortgage pass-through securities through the use of “to-be-announced” or “TBA Transactions.” “TBA” refers to a commonly used mechanism for the forward settlement of U.S. agency mortgage pass-through securities, and not to a separate type of mortgage-backed security. Transactions in mortgage pass-through securities may occur through the use of TBA Transactions. TBA Transactions generally are conducted in accordance with widely-accepted guidelines which establish commonly observed terms and conditions for execution, settlement and delivery.
In a TBA Transaction, the buyer and seller decide on general trade parameters, such as agency, settlement date, par amount, and price. The actual pools delivered generally are determined prior to settlement date.
The Fund may invest up to 20% of its net assets in corporate high yield securities (junk bonds). Under normal circumstances, the combined total of corporate, sovereign, non-agency and all other debt rated below investment grade will not exceed 40% of the Fund’s net assets. Below investment grade securities are instruments that are rated BB+ or lower by S&P or Fitch Inc. or Ba1 or lower by Moody’s or equivalent ratings by another registered NRSRO or, if unrated by an NRSRO, of comparable quality in the opinion of the Sub-Adviser. The Sub-Adviser strives to allocate securities broadly by industry and issuer in an attempt to reduce the impact of negative events on an industry or issuer.
The Fund may invest up to 15% of its net assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Fund may invest up to 20% of its net assets in securities and instruments that are economically tied to emerging market countries. The Fund generally considers an issuer to be economically
tied to an emerging market country if: (i) the issuer is organized under the laws of an emerging country; (ii) the issuer’s securities are traded principally in an emerging country; or (iii) during the issuer’s most recent fiscal year it derived at least 50% of its revenues, earnings before interest, taxes, depreciation, and amortization, or profits from goods produced or sold by, investments made in, or services performed in emerging countries, or it had at least 50% of its assets in emerging countries.
The Sub-Adviser monitors the duration of the securities held by the Fund to seek to mitigate exposure to interest rate risk. Under normal circumstances, the Sub-Adviser seeks to maintain an investment portfolio with a weighted average effective duration between 1 and 3 years.
The Sub-Adviser actively manages the Fund’s asset class exposure using a top-down approach based on analysis of sector fundamentals and rotates Fund assets among sectors in various markets to attempt to maximize return. Individual securities within asset classes are selected using a bottom-up approach. Under normal circumstances, the Sub-Adviser uses a controlled risk approach in managing the Fund’s investments. The techniques of this approach attempt to control the principal risk components of the fixed income markets and include consideration of:
• security selection within a given sector;
• relative performance of the various market sectors;
• the shape of the yield curve; and
• fluctuations in the overall level of interest rates.
Fund’s Top 10 Holdings (04/14/16):
| US TREASURY N/B 0.875 07/15/2017 | 8.99% |
| US TREASURY N/B 1 09/15/2017 | 8.44% |
| US TREASURY N/B 0.875 11/30/2017 | 8.43% |
| US TREASURY N/B 0.625 08/31/2017 | 8.40% |
| US TREASURY N/B 0.625 05/31/2017 | 7.85% |
| US TREASURY N/B 0.75 04/15/2018 | 7.84% |
| CREDIT SUISSE AGENCY M 6807 DA | 5.79% |
| US TREASURY N/B 0.875 07/15/2018 | 5.61% |
| MORGAN STANLEY 2.45 02/01/2019 | 1.65% |
| ROYAL BANK OF CANADA 2 12/10/2018 | 1.47% |
Fund’s Sector Allocation (04/14/16):
| Treasury | 55.57% |
| Emerging Markets | 15.79% |
| Investment Grade Corporate | 13.38% |
| High Yield Corporate | 6.42% |
| Bank Loans | 1.68% |
| Commercial Mortgage Backed Securities | 1.38% |
Fund’s Region Allocation (04/14/16):
| North America | 82.44% |
| Central America | 7.74% |
| South America | 5.71% |
| Middle East | 2.33% |
| Western Europe | 1.77% |
Fund’s Country Weights (04/14/16):
| United States | 79.70% |
| Mexico | 4.33% |
| Canada | 2.74% |
| Israel | 2.33% |
| Peru | 2.28% |
| Colombia | 2.27% |
| Panama | 2.26% |
| United Kingdom | 1.21% |
| Chile | 1.16% |
| Guatemala | 1.15% |
| Luxembourg | 0.56% |
Useful Links:
STOT Home Page
Category: