State Street Global Advisors (SSgA), one of the largest providers of ETFs worldwide, has filed a registration statement with the SEC to bring to market six new actively-managed ETFs. The filing was made on April 1, along with the registration of the SSgA Active ETF Trust through which the actively-managed ETFs will be launched. SSgA had previously been requesting exemptive relief to launch active ETFs through the SPDR Series Trust, and in Nov. 2010 had amended that application to remove the usage of derivatives from its planned funds.
The six funds outlined in the latest application are different from the “target date funds” that were being proposed under the previous application. SSgA Fund Management will serve as the investment advisor to the first five funds. The preliminary prospectus filed by SSgA did not include tickers or expense structures, but did provide descriptions of the planned funds:
1. SSgA Real Asset ETF: The fund looks to achieve real returns by providing exposure to four primary asset classes – U.S. government inflation-protected securities, domestic and international real estate securities, commodities and commodity-related equities.
2. SSgA Income Opportunities ETF: The fund seeks to provide total return by focusing on investments in income and yield-generating assets. It will provide exposure to four main asset classes – domestic and international equities, debt securities, hybrid securities (preferred stocks/convertible bonds) and real estate securities.
3. SSgA Conservative Allocation ETF: This fund looks to provide current income and capital appreciation while avoiding volatility. This is achieved through exposure to domestic and international debt as well as equity securities, with a larger allocation to debt.
4. SSgA Moderate Allocation ETF: This fund looks to provide current income and capital appreciation with a secondary emphasis on capital appreciation. This is achieved through exposure to domestic and international debt as well as equity securities, with the allocation changing over time along with the manager’s expectation of each asset class.
5. SSgA Aggressive Allocation ETF: This fund looks to provide capital appreciation with a secondary emphasis on current income and capital preservation. This is achieved through exposure to domestic and international debt as well as equity securities, with a larger allocation to equities.
6. SSgA Blackstone / GSO Senior Loan ETF: This fund attempts to provide current income while preserving capital by investing in “Senior Loans,” which are defined as first lien senior secured floating rate bank loans made out to companies. These securities typically pay a floating interest rate that is linked to LIBOR. Senior loans are higher in the capital structure than all other unsecured claims, meaning that in event of bankruptcy, these loans are entitled to be the first to be repaid. GSO / Blackstone Debt Funds Management will serve as the sub-advisor to this fund. The fund will be benchmarked to and will look to outperform the S&P/LSTA U.S. Leveraged Loan 100 Index.
With BlackRock iShares and Eaton Vance both receiving the go-ahead to launch active ETFs recently, and now State Street moving forward with some concrete fund plans, the active ETF space does appear to be gaining some momentum. The entrance of these three large fund companies itself would be a big boost for the space as a whole.
Disclosure: No positions in above-mentioned names.
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