State Street Global Advisors, the money manager behind the $10 billion SPDR Barclays High Yield Bond ETF (JNK), filed regulatory paperwork seeking permission to market an international version of the successful flagship high-yield credit fund, the latest addition to a growing franchise of junk ETFs.
In a clear signal to investors, SSgA said in the paperwork that the proposed SPDR Barclays International High Yield Bond ETF will have a primary listing on the New York Stock Exchange’s electronic platform under the ticker “IJNK.” It’s not the first time the No. 3 U.S. ETF firm has riffed off the “JNK” ticker. The fund will hold high-yield corporate credits from a variety of non-U.S. issuers.
About a year ago, it rolled out the SPDR Barclays Short Term High Yield Bond ETF (SJNK), a fund that cherry-picks U.S. junk credits ranging from short-dated bills to notes that go out five years on the high-yield corporate credit curve. That fund now has nearly $1.5 billion—a clear success in such a limited time.
The success of JNK and SJNK and of junk funds from rival sponsors—notably the nearly $14 billion iShares iBoxx $ High Yield Corporate Bond Fund (HYG)—speak to the quest for yield among investors in the wake of the market crash of 2008-2009. That said, outflows from funds like JNK have been accelerating amid views the post-crash era of easy-money central bank policy might start ending.
The two funds’ shares outstanding have dropped about 20 percent since the end of 2012, with total outflows between the two funds of more than $4 billion this year. JNK had $12.5 billion in assets at the end of last year, compared with $10 billion currently. The drop reflects outflows and price decline.
The new fund, IJNK, will track the Barclays Global ex US Issuers High Yield Corporate Bond Index, and will use a sampling strategy, meaning it doesn’t have to own all the securities in the index to achieve its objective.
State Street said in the filing it was reserving the right to charge a 0.25 percent-a-year 12-b1 fee to help pay for costs to market the fund, though the company said it was waiving that fee for at least 12 months. That language recurs in a number of SSgA fund filings, and doesn’t suggest 12-b1 fees are in the works.
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