They are the SPDR BofA Merrill Lynch Crossover Corporate Bond ETF and the SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF.
The SPDR BofA Merrill Lynch Crossover Corporate Bond ETF tracks the performance of the BofA Merrill Lynch US Diversified Crossover Corporate Index, which includes 3,029 securities. Each security in the index has a BBB1 through BB3 inclusive rating, a fixed-income coupon schedule, at least one year remaining to final maturity and a minimum amount of outstanding of $250 million or more of issuance. The fund’s expense ratio is 0.30%.
The SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF seeks to track the performance of the BofA Merrill Lynch Emerging Markets Large Cap Senior Corporate Index, which includes 454 securities.
According to James Ross, State Street Global Advisors’ senior managing director and global head of SPDR ETFs, in the extended low-yield environment, advisers and investors are showing more demand for crossover bonds because of their potential for less credit risk and yields that are potentially higher than most investment-grade bonds.
The index is designed to measure the performance of U.S. dollar-denominated emerging market corporate senior and secured debt publicly issued in the U.S. domestic market and the Eurobond market. Each security in the index is denominated in U.S. dollars, is senior or secured debt, has at least one year remaining to final maturity, includes a fixed coupon and has $500 million or more in outstanding face value. The fund’s expense ratio is 0.50%.
Investors have the opportunity to tap into the growth potential of emerging markets while minimizing exposure to emerging market currencies with the SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF, Ross said. “As fixed-income portfolio diversification becomes a higher priority for investors, interest in emerging market bond exposure is increasing.”