SPDR® SSgA Income Allocation ETF’s Process Pillar rating is just average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The management team's considerable industry experience drives an Above Average People Pillar rating for the strategy. The strategy merits an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial overweight position in the Australasia region and has a substantial underweight in the consumer cyclical sector compared with category peers. The strategy is part of a first-rate parent that has overall affordable fees and a high success ratio across its product shelf. These attributes support its Above Average Parent Pillar rating.

Analyst Rating

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Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, clearly defined, repeatable execution. SPDR® SSgA Income Allocation ETF earns an Average Process Pillar rating. The most important driver of the rating is the parent firm's five-year risk-adjusted success ratio of 67%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's impressive risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also influences the rating. Lastly, the process is limited by the fund's unimpressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

 Its equity sleeve has a consistent bias toward both smaller market-cap and value-oriented stocks as opposed to the category average. The strategy has three region or sector biases compared to category peers. The most notable is its consistent overexposure to the Australasia region. It also sustains an underweight position in the consumer cyclical sector. And finally, in the fund's most recent portfolio, less assets were allocated to developed markets regions. Although, this bias has not existed over time. 

 The portfolio is overweight in real estate and utilities relative to the category average by 25.6 and 12.4 percentage points, respectively. The sectors with low exposure compared to category peers are technology and healthcare, underweight the average by 18.5 and 9.2 percentage points of assets, respectively. The portfolio is overweight in Developed Europe and Developed Asia regions relative to the category average by 3.2 percentage points and 2.9 percentage points, respectively. The regions with low exposure compared to their category peers are North America and United Kingdom, with North America underweight the average by 11.1 percentage points and United Kingdom similar to the average.

 In the portfolio's fixed-income allocation, credit and interest rate risk are more prominent than peers. In particular, the portfolio exhibits a lower average credit rating of BB in contrast to the category average's BBB and has a longer average duration of 7.0 years versus the average's 5.4 years.

Average

Process

SPDR® SSgA Income Allocation ETF benefits from an experienced corps of managers and its longest-tenured manager, warranting an Above Average People Pillar rating. Jeremiah K. Holly, the longest-tenured manager on the strategy, provides strong guidance, offering 15 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 1.5 stars, indicating that their risk-adjusted returns have underperformed the category average. Despite having a small team, the two listed managers boast 17 years of portfolio management experience. As a team, they manage six investment vehicles together, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha in aggregate.   

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Above Average

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR SSgA Income Allocation ETF

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