State Street Global Advisors introduced a new exchange traded fund this week indexed to high-yield corporate bonds with short durations that have less sensitivity to rising interest rates.
The tracking index for SPDR Barclays Capital Short Term High Yield Bond ETF (NYSEArca: SJNK - News) has 351 securities and an average duration of about two years. The fund has an expense ratio of 0.40%. [ETF Spotlight: High-Yield Bonds]
“Offering equity-like returns with less volatility, demand for high yield bond exposure is on the rise,” said James Ross, global head of SPDR ETFs at State Street Global Advisors. [Bond ETF Assets Rise Nearly 40% in a Year]
High-yield corporate bonds with shorter durations “can help to protect against an inevitable rise in interest rates,” he said.
The new ETF will compete against other funds in the “junk” bond category such as PIMCO 0-5 Year High Yield Corporate Bond Index Fund (NYSEArca: HYS), which holds assets of $225 million. [High-Yield Bond ETFs See Record Inflow]
PIMCO 0-5 Year High Yield Corporate Bond Index Fund