State Street Global Advisors on Wednesday launched two sector rotation SPDR exchange-traded funds—one for equities and one for fixed income.
Both products are structured as a fund of funds, and they’re actively managed by State Street’s Investment Solutions Group of 75 strategists, analysts and portfolio managers overseeing more than $266 billion in assets.
The SPDR SSGA US Sector Rotation ETF (XLSR) is designed to tactically allocate among the GICS-defined sectors of the S&P 500 Index. GICS stands for Global Industry Classification Standards, which were created by S&P Dow Jones Indices and MSCI.
The fund’s investment universe comprises the 11 Select Sector SPDR ETFs that respectively invest in one of the 11 GICS sectors. It employs quantitative analysis based on sector return forecasts and research, and combines that with qualitative judgment to overweight or underweight S&P 500 sector ETFs in the attempt to maximize returns while accounting for risk.
It charges an expense ratio of 0.70 percent.
The SPDR SSGA Fixed Income Sector Rotation ETF (FISR) uses a sector rotation model that incorporates macroeconomic, financial and market data in order to evaluate the direction of rates and spreads across the maturity and credit quality spectrums. It combines that with a qualitative review by the fund managers to tactically allocate across a portfolio of income and yield-generating fixed-income ETFs in the following sectors: U.S. government or agency bonds; treasury inflation protected securities, or TIPS; corporate bonds; mortgage-backed securities; high-yield bonds; international—both developed and emerging markets—government and corporate bonds; senior loans; floating-rate notes and cash equivalents.
Its expense ratio is 0.50 percent.
Both funds will typically rebalance monthly, though that might vary depending on market conditions. And according to State Street, the funds might not have exposure to every targeted sector at all times.