New ETF Invests in High Yield Corporate Bonds, Senior Loans and CLOs, Seeking to Provide Risk-Adjusted Total Return and High Current Income
BOSTON–(BUSINESS WIRE)–State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), today announced the launch of the SPDR® Blackstone High Income ETF (HYBL). Sub-advised by Blackstone Credit (“Blackstone”), HYBL is actively managed and invests in US dollar-denominated high yield debt securities seeking to provide investors with risk-adjusted returns and high current income. Blackstone is also sub-adviser of the SPDR® Blackstone Senior Loan ETF (SRLN).
“We’re excited to expand on our successful partnership with Blackstone to provide investors with a new approach to income investing,” said Sue Thompson, head of SPDR Americas Distribution at State Street Global Advisors. “As investors search for higher yields, demand for senior loans and high yield corporate bonds is on the rise. HYBL is designed to meet this demand while providing access to Blackstone’s deep expertise across these segments of the credit market.”
As sub-adviser of HYBL, Blackstone will actively manage a portfolio of high yield corporate bonds, senior loans, and debt tranches of US CLOs using a top-down asset allocation approach coupled with bottom-up security selection that seeks to outperform a composite benchmark comprising 50% high yield bonds and 50% senior loans with less volatility than the individual benchmark components over a full market cycle.
The top-down asset allocation approach evaluates macroeconomic, technical, fundamental, and relative value factors to determine the allocation among the asset classes. The bottom-up security selection process relies on fundamental credit research to determine security selection within each asset class, while utilizing a systematic process in high yield bonds to seek to capture credit risk premium by identifying and exploiting potential mispricing at the individual security level.
Dan McMullen, Head of North American Liquid Portfolio Management for Blackstone said, “We see a compelling opportunity to generate income in high yield corporate bonds, senior loans and CLO debt securities through our active management approach. HYBL will build on the proven track record we have established through SRLN with State Street and benefit from our deep expertise in credit investing.”
In April 2013, State Street Global Advisors and Blackstone launched the SPDR Blackstone Senior Loan ETF (SRLN), the first actively managed ETF to provide exposure to senior loans. With over $6.7 billion of inflows last year, SRLN was the fastest growing US-listed active ETF in all of 2021. Net assets under management in SRLN totaled over $8.9 billion as of December 31, 2021.1
For more information on the SPDR Blackstone High Income ETF, visit www.ssga.com/etfs.
About SPDR Exchange Traded Funds
SPDR ETFs are a comprehensive family spanning an array of international and domestic asset classes. SPDR ETFs are sponsored by affiliates of State Street Global Advisors. The funds provide investors with the flexibility to select investments that are aligned to their investment strategy. For more information, visit www.ssga.com/etfs
Blackstone is the world’s largest alternative asset manager. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our $881 billion in assets under management include investment vehicles focused on private equity, real estate, public debt and equity, life sciences, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis.2 Further information is available at www.blackstone.com.
About State Street Global Advisors
For four decades, State Street Global Advisors has served the world’s governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world’s fourth-largest asset manager* with US $4.14 trillion† under our care.
*Pensions & Investments Research Center, as of 12/31/20.
†This figure is presented as of December 31, 2021 and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.
1 Bloomberg Finance L.P. data as of December 31, 2021.
2 Blackstone as of December 31, 2021.
Important Risk Disclosures
Investing involves risk of including the risk of loss of principal.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns.
Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.
The value of the debt securities may increase or decrease as a result of the following: market fluctuations, increases in interest rates, inability of issuers to repay principal and interest or illiquidity in the debt securities markets; the risk of low rates of return due to reinvestment of securities during periods of falling interest rates or repayment by issuers with higher coupon or interest rates; and/or the risk of low income due to falling interest rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated and the value of those securities may fall sharply. This may result in a reduction in income from debt securities income.
Investments in Senior Loans are subject to credit risk and general investment risk. Credit risk refers to the possibility that the borrower of a Senior Loan will be unable and/or unwilling to make timely interest payments and/or repay the principal on its obligation. Default in the payment of interest or principal on a Senior Loan will result in a reduction in the value of the Senior Loan and consequently a reduction in the value of the Portfolio’s investments and a potential decrease in the net asset value (NAV) of the Portfolio. Securities with floating or variable interest rates may decline in value if their coupon rates do not keep pace with comparable market interest rates. Narrowly focused investments typically exhibit higher volatility and are subject to greater geographic or asset class risk. The fund is subject to credit risk, which refers to the possibility that the debt issuers will not be able to make principal.
The fund is actively managed. The sub-adviser’s judgments about the attractiveness, relative value, or potential appreciation of a particular sector, security, commodity or investment strategy may prove to be incorrect, and may cause the fund to incur losses. There can be no assurance that the sub-adviser’s investment techniques and decisions will produce the desired results.
Investing in high yield fixed income securities, otherwise known as “junk bonds”, is considered speculative and involves greater risk of loss of principal and interest than investing in investment grade fixed income securities. These lower-quality debt securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.
While the shares of ETFs are tradable on secondary markets, they may not readily trade in all market conditions and may trade at significant discounts in periods of market stress.
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State Street Global Advisors Funds Distributors, LLC is the distributor for some registered products on behalf of the advisor. SSGA Funds Management has retained Blackstone Liquid Credit Strategies LLC as the sub-advisor. State Street Global Advisors Funds Distributors, LLC is not affiliated with Blackstone Liquid Credit Strategies LLC.
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