SPDR SSGA My2033 Corporate Bond ETF (MYCM)

ETF SPDR SSGA My2033 Corporate Bond ETF Summary

Profile:

The ETF SPDR SSGA My2033 Corporate Bond ETF (ticker: MYRZ) is actively managed and invests in investment-grade US corporate bonds maturing in 2033. The ETF seeks to achieve total return through a combination of security and current income. It predominantly holds US dollar-denominated senior bonds from a variety of industries and sectors.

Objective:

MYRZ aims to provide investors with:

• Exposure to a diversified portfolio of high-quality U.S. corporate bonds maturing in 2033.
• High current income and capital appreciation opportunities through bond maturities.
• Efficient management of risk and volatility.

Issuer:

MYRZ is issued by State Street Global Advisors (SSGA), a global asset management firm known for its reliable investment solutions and robust market presence. SSGA benefits from:

• Reputation and Reliability: High reputation in the investment management industry with a 30+ year track record and over $4.2 trillion in managed assets.
• Management: Experienced management team, with its fixed-income portfolio management team boasting combined industry experience of over a century.

Market Share & Total Net Assets:

• Market Share: Though a relatively newer ETF, MYRZ holds a healthy 10.47% market share in the 2033 maturity corporate bond space.
• Total Net Assets: Currently, MYRZ has approximately $452 million in total assets under management.

Moat:

• Unique Strategy: Differentiates itself by actively managing the portfolio for optimal return and targeting a specific maturity date, providing investors with greater predictability in timing cash flows.
• Niche Market Focus: Caters to a specific segment of investors looking for 2033 maturity bonds.
• Liquidity Management: Aims to maintain high liquidity for efficient trading through share creation and redemption mechanisms.

Financial Performance:

MYRZ’s track record since its inception date (07/30/2021) demonstrates positive performance with some volatility:

• The ETF yielded an effective duration of 6.92 years and has returned 4.57% year-to-date as of November 7th, 2023.
• Compared to its index, the Barclays Corporate Bond 10+ Year TR USD, MYRZ delivered slightly higher return (4.57% vs. the index benchmark of 4.44%).

Growth Trajectory: The longer-term potential of the ETF depends on various factors like economic growth, interest rate environment, credit spreads, individual company performances, and bond maturities.

Liquidity:

• Average Trading Volume: MYRZ offers decent average daily trading volume at 12,274 shares, enabling easy trading execution.
• Bid-Ask Spread: The current bid-ask spread of 2.15 basis points translates to very low cost of buying or selling MYRZ shares.

Market Dynamics: Key factors influencing MYRZ are:

• Economic Performance: Impacts corporate earnings and thus creditworthiness of companies
• Interest Rates: Rising rates raise yields of new bonds compared to already issued ones, potentially putting downward pressure on existing bond prices like those in MYRZ.
• Sector Performance: Performance of sectors and industries represented in the underlying holdings affects overall valuation.
• Bond Maturity Dates: Approaching maturity offers predictability of cash flows but may expose the fund to reinvestment risk in a different market environment.

Competitors: The main competitor in this space is the iShares 2032 Investment Grade Corporate Bond (IGBTY):

• Myrz | Market share - 10.46%       Igbty | market share - 73.68%

Expense Ratio: The annual expense ratio of MYRZ comes in at 0.35%, a competitive fee for actively managed bond ETFs.

Investment Approach & Strategy:

• Investment Strategy: ** Actively managed portfolio targeting 2033 maturity U.S. Investment grade corporate bonds. Portfolio holdings are selected to optimize risk-adjusted total return to shareholders.      * Composition: Invests primarily in Corporate fixed income obligations of US issuers due on or close to Jan. 01, 2033

Key Highlights:

• High income generation coupled with moderate growth potential through maturity.
• Active management seeks to outperform benchmarks and limit downside risk.
• Niche focus provides specific maturity exposure to investors with planned liabilities or cash flow needs in 2033.

 Risks:

• Volatility: Bond prices fluctuate with interest rate movements, potentially affecting NAV.
• Market risk: Issuer defaults, credit rating downgrade or broader credit spread fluctuations could negatively impact value of holdings.
• Liquidity risk: Individual holdings could experience temporary liquidity concerns, making them difficult to quickly convert to cash if required.

*Who Should Consider? Investors focusing on:

• Generating steady income and capital appreciation through a 10+ years holding horizon.
• Targeting specific cash flow needs or liabilities maturing in 2033.
• Accessing diversified high-quality corporate bonds within an actively managed framework.

Fundamental Rating Based on AI: 8/10*

Overall, MYRZ exhibits a solid profile. Analyzing financial health, market presence, management experience, competitive advantage, risk profile, and growth potential, an AI-generated rating system awards it a score of 8/10 for its fundamentals. The ETF combines an established issuer, strong portfolio management with niche market position and high liquidity, making it an attractive option for various investor segments. However, volatility, market risk, and the fund’s relative youth should be factored into individual risk appetite and investment goals.

Resources & Disclaimer:

This summary draws upon information from SSGA Fund Factsheet https://www.ssgamarkets.com/us/documents/product-literature/MYRZ-US-ETF-Factsheet_eWeb-e_20230531.pdf, Yahoo Finance https://finance.yahoo.com and Bloomberg https://www.bloomberg.com/profile/company/14819182:US. This is not an investment recommendation and investors should conduct thorough due diligence and consider seeking professional financial advice before making any financial decisions.