New ETF Aims to Address Inflation Risk

Asset management firm State Street Global Advisors (SSgA) says its SPDR Barclays 0-5 Year TIPS ETF began trading this week.

The exchange-traded fund (ETF) is designed to give investors a potential opportunity to protect their portfolios from inflation and diversify their fixed income allocations to prepare for rising interest rates. It adds to investors’ options in the SPDR fixed income product suite in a short-term Treasury Inflation-Protected Securities (TIPS) offering.

The fund can be used by both defined benefit (DB) and defined contribution (DC) retirement plans says Dave Mazza, SSgA’s Head of Research for SPDR ETFs. “One of the areas of growth that we’re seeing is ETFs being used by institutional investors such as DB and DC plans,” the Boston-based Mazza tells PLANADVISER. “They are going in with a blank slate to their fixed income approach.”

With regard to the benefits the fund offers DB and DC plans, Mazza says, “One benefit is that the fund offers plans an option if they require increased liquidity, as well as control over their portfolio assets. Another benefit is that the fund offers institutional investors, such as DB and DC plans, the potential for adapting to a rising interest rate environment. A short-duration ETF like this gives some inflation hedging potential, as well as reducing interest rate risks. Overall, the fund provides a better way to weather potential storms.”

The SPDR Barclays 0-5 Year TIPS ETF seeks to track the performance of the Barclays 0-5 Year Government Inflation-linked Bond Index, which includes publicly issued TIPS that have less than five years remaining to maturity and an issue size of at least $500 million. It has an expense ratio of 0.15%.

SSgA managed more than $413 billion in SPDR ETF assets worldwide as of December 31, 2013. More information is available at 866-787-2257 or