State Street Global Advisors (SSgA1), the investment management arm of State Street Corporation (NYSE: STT) and the largest institutional fund manager in the world2, yesterday announced three new fixed income SPDRs, including the first ETF to offer investors exposure to the national short term municipal bond market, began trading on the American Stock Exchange (Amex) on October 15, 2007.
Based upon indices constructed by Lehman Brothers, one of the world’s leading providers of fixed income benchmarks, the three new municipal bond SPDRs include:
|ETF Name||Ticker||Index Description|
SPDR® Lehman Short Term Municipal Bond ETF
|SHM||The Lehman Brothers Managed Money Municipal Short Term Index provides exposure to over 3,600 issues with a nominal maturity of one to five years and an outstanding par value of at least $7 million. The average credit quality of the index is AA1/AAA and none of its bonds are currently subject to Federal taxes or the Alternative Minimum Tax (AMT).||0.20%|
SPDR® Lehman California Municipal Bond ETF
|CXA||The Lehman Brothers Managed Money Municipal California Index provides exposure to over 3,000 publicly traded California municipal bonds that have at least an outstanding par value of $7 million. The average credit quality of the index is AA1/AAA and none of its bonds are currently subject to Federal taxes, California state income taxes, or the Alternative Minimum Tax (AMT).||0.20%|
SPDR® Lehman New York Municipal Bond ETF
|INY||The Lehman Brothers Managed Money Municipal New York Index provides exposure to over 2,900 publicly traded New York municipal bonds that have at least an outstanding par value of $7 million. The average credit quality of the index is AA1/AAA and none of its bonds are currently subject to Federal taxes, New York State income taxes, or the Alternative Minimum Tax (AMT).||0.20%|
“In providing convenient, low cost access to the short-term tax exempt bond market and two of the largest municipal bond markets in the nation, these three new SPDRs will help investors enhance the diversification and after-tax returns of their portfolios with the utmost precision,” said Anthony Rochte, senior managing director at State Street Global Advisors. “When you compare the expense ratios of our municipal bond SPDRs with that of the average actively managed municipal bond fund, it’s easy to understand why there’s so much demand among our clients for these new ETFs.”
With the launch of these three new municipal bond SPDRs, State Street’s growing family of fixed income ETFs now includes ten funds that provide precise, low-cost access to an array of fixed income segments and maturities. The fixed income SPDRs launched by State Street earlier this year include:
- SPDR® Lehman International Treasury Bond ETF (BWX)
- SPDR® Lehman Municipal Bond ETF (TFI)
- SPDR® Lehman 1-3 Month T-Bill (BIL)
- SPDR® Barclays TIPS ETF (IPE)
- SPDR® Lehman Aggregate Bond ETF (LAG)
- SPDR® Lehman Intermediate Term Treasury ETF (ITE)
- SPDR® Lehman Long Term Treasury ETF (TLO)
State Street Global Advisors has managed fixed income index funds since 1984. Today, the firm manages more than $244 billion3 in total fixed income globally and more than $120 billion4 in ETF assets worldwide.
About State Street Global Advisors
State Street Global Advisors, the investment management arm of State Street Corporation (NYSE: STT), delivers investment strategies and integrated solutions to clients worldwide across every asset class, investment approach and style. With $2 trillion in assets under management as of September 30, 2007, State Street Global Advisors has investment centers in Boston, Hong Kong, London, Milan, Montreal, Munich, Paris, Singapore, Sydney, Tokyo and Zurich, and offices in 25 cities worldwide. For more information, visit State Street Global Advisors at www.ssga.com.
1 The Funds are advised by SSgA Funds Management Inc., a registered investment adviser and a wholly owned subsidiary of State Street Corporation.
2 Source: Pensions & Investments magazine, based on assets under management as of December 31, 2006.
3 As of September 30, 2007
4 SSgA Funds Management manages $120 billion in ETF assets as of August 31, 2007
ETFs trade like stocks, are subject to investment risk and will fluctuate in market value.
The municipal market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Interest rate increases can cause the price of a debt security to decrease. A portion of the dividends you receive may be subject to federal, state, or local income tax or may be subject to the federal alternative minimum tax.
The market for municipal bonds may be less liquid than for taxable bonds. There may also be less information available on the financial condition of issuers of municipal securities than for public corporations. This means that it may be harder to buy and sell municipal securities, especially on short notice, and municipal securities may be more difficult to value accurately than securities of public corporations.
Bond funds contain interest rate risk (as interest rates rise bond prices usually fall); the risk of issuer default; and inflation risk.
Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
Diversification does not ensure a profit or guarantee against loss.
The “SPDR” trademark is used under license from The McGraw-Hill Companies, Inc. (“McGraw-Hill”). No financial product offered by State Street Corporation or its affiliates is sponsored, endorsed, sold or promoted by McGraw-Hill.
Distributor: State Street Global Markets, LLC, member FINRA, SIPC, a wholly owned subsidiary of State Street Corporation. References to State Street may include State Street Corporation and its affiliates.
Before investing, carefully consider the funds’ investment objectives, risks, charges and expenses. A prospectus, which contains this and other important information about the fund can be obtained by calling 866.787.2257. Read it carefully before investing.
Marie McGehee, 617-664-1898
Troy Mayclim, 914-686-5599