SPDR Barclays Short Term Corporate Bond (SPSB)

Overview of ETF SPDR Barclays Short Term Corporate Bond (SCHR)

Profile

SCHR is an exchange-traded fund (ETF) managed by State Street Global Advisors (SSGA). It tracks the Bloomberg Barclays US Short-Term Corporate Bond Index, which focuses on investment-grade, USD-denominated corporate bonds with maturities of 1-3 years. SCHR primarily invests in bonds issued by US corporations across various industries.

Objective

The primary investment goal of SCHR is to provide current income through short-term bond investments while minimizing interest rate risk through its short-duration exposure. The ETF aims to offer investors a convenient and diversified way to access the short-term corporate bond market.

Issuer

SSGA: State Street Global Advisors is a leading asset manager with over $4.12 trillion in assets under management. It has a strong reputation and track record in the ETF industry, managing a diverse range of ETFs across various asset classes. SSGA is known for its robust research and investment capabilities.

Management: SSGA's ETF management team possesses extensive experience in fixed income markets and portfolio construction. The team employs rigorous research and quantitative analysis to maintain the ETF's alignment with its target index.

Market Share

SCHR is one of the largest short-term corporate bond ETFs, with a market share of approximately 30% in this space. Its strong market position reflects investor confidence in SSGA's expertise and the ETF's track record.

Total Net Assets

As of October 26, 2023, SCHR has approximately $40.33 billion in total net assets, indicating substantial investor interest in the ETF.

Moat

SCHR's competitive advantages include:

• Low expense ratio: SCHR has a low expense ratio of 0.03%, making it one of the most cost-effective short-term corporate bond ETFs available.
• Liquidity: With an average daily trading volume of over 12 million shares, SCHR offers excellent liquidity, ensuring easy entry and exit for investors.
• Strong track record: SCHR has consistently outperformed its benchmark index, demonstrating the effectiveness of its investment strategy.

Financial Performance

Historical Performance: Since its inception in 2009, SCHR has delivered an annualized total return of 3.45%. The ETF has also outperformed its benchmark index, the Bloomberg Barclays US Short-Term Corporate Bond Index, by an average of 0.15% per year.

Benchmark Comparison: Over the past year, SCHR has returned 3.87%, while its benchmark index returned 3.72%. This demonstrates the ETF's ability to generate slightly higher returns while closely tracking its target index.

Growth Trajectory

The short-term corporate bond market is projected to experience moderate growth in the coming years, driven by factors such as rising interest rates and the continued demand for fixed income investments. This bodes well for SCHR's future growth prospects.

Liquidity

Average Trading Volume: SCHR's average daily trading volume exceeds 12 million shares, highlighting its excellent liquidity and ease of trading for investors.

Bid-Ask Spread: The bid-ask spread for SCHR is typically around 0.02%, indicating a low cost of trading the ETF.

Market Dynamics

Factors affecting SCHR's market environment include:

• Interest rate environment: Rising interest rates tend to negatively impact bond prices, including those held by SCHR.
• Economic growth: A robust economy usually leads to increased corporate borrowing, potentially boosting the performance of short-term corporate bonds.
• Creditworthiness of issuers: The creditworthiness of the underlying bond issuers can directly impact the value of SCHR's holdings.

Competitors

Key competitors to SCHR include:

• iShares Aaa-A Rated Corporate Bond ETF (QLTA): Market share - 15%
• Vanguard Short-Term Corporate Bond ETF (VCSH): Market share - 12%

Expense Ratio

SCHR's expense ratio is 0.03%, making it one of the most affordable short-term corporate bond ETFs in the market.

Investment Approach and Strategy

Strategy: SCHR passively tracks the Bloomberg Barclays US Short-Term Corporate Bond Index, aiming to replicate its performance.

Composition: The ETF primarily invests in short-term corporate bonds issued by US companies across various industries with investment-grade credit ratings.

Key Points

• Focuses on short-term corporate bonds minimizing interest rate risk.
• Provides current income through regular interest payments.
• Offers diversification across various industries and issuers.
• Low expense ratio and high liquidity.
• Strong track record of outperforming its benchmark index.

Risks

• Interest rate risk: Rising interest rates can negatively impact SCHR's value.
• Credit risk: Default risk of the underlying bond issuers could lead to losses.
• Market volatility: Overall market fluctuations can affect the ETF's performance.

Who Should Consider Investing