SPDR® SSgA Income Allocation ETF’s Process Pillar rating is 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 cheapest fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy merits an Average Process Pillar rating.  The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

SPDR Bloomberg High Yield Bond ETF

SPDR Portfolio Long Term Treasury ETF

SPDR Portfolio S&P 500 High Dividend ETF

Schwab US Dividend Equity ETF

SPDR S&P Global Infrastructure ETF

SPDR Bloomberg 1-3 Month T-Bill ETF

SPDR Wells Fargo Preferred Stock ETF

 SPDR Blackstone Senior Loan ETF

SPDR Bloomberg Emerging Markets Local Bond ETF

SPDR Bloomberg Emerging Markets USD Bond ETF

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. SPDR® SSgA Income Allocation ETF earns an Average Process Pillar rating. The leading factor in the rating is the parent firm's five-year risk-adjusted success ratio of 58%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's superior 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 weak 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 demonstrated a consistent bias to both smaller market-cap and value-oriented companies versus the category average. The strategy has three region or sector biases compared to category peers. The most meaningful exposure is to the Australasia region, where the portfolio is typically overallocated. Additionally, the portfolio has maintained an underweight bias to 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 17.9 and 12.7 percentage points, respectively. The sectors with low exposure compared to category peers are technology and healthcare, underweight the average by 19.7 and 6.0 percentage points of assets, respectively. The portfolio is overweight in Australasia by 2.7 percentage points compared with the category average, and Latin America's allocation is similar to its peers. The regions with low exposure compared to their category peers are North America and United Kingdom; however, the allocations are only 1.0 percentage points and 1.0 percentage points underweight the average, respectively.

 In the fund’s bond sleeve, credit and interest rate risk exposures are more significant than those of comparable strategies. More concretely, the strategy has an average credit rating of BB versus the category average’s BBB and has a longer average duration of 6.6 years as opposed to the category average's 5.1 years.

Average

Process

SPDR® SSgA Income Allocation ETF earns an Above Average People Pillar rating. Jeremiah K. Holly, the longest-tenured manager on the strategy, boasts 15 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.0 stars, reflecting below-average risk-adjusted performance compared to category peers. Despite having a small team, the two listed managers boast 18 years of listed portfolio management experience. As a team, they manage six investment vehicles together, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential 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

INKM is an actively-managed, income-focused ETF of domestic and international ETFs with exposure to equities, investment-grade and high-yield debt, preferred stocks and REITs.

PIMCO Active Bond ETF

iShares Fallen Angels USD Bond ETF

Fidelity Limited Term Bond ETF

First Trust Preferred Securities & Income ETF

JPMorgan High Yield Research Enhanced ETF

In an earlier article, we discussed that in a market of low and stable / rising yields, open-end funds can provide similar performance to CEFs with much better risk control. In this article, we take a look at active ETFs, which provide the benefits of open-end funds alongside the active management of CEFs.

The Role Of Active ETFs In Income Portfolios

SPDR Gold Trust

SPDR Gold MiniShares Trust

SPDR SSGA US Large Cap Low Volatility Index ETF

SPDR MSCI EAFE StrategicFactors ETF

SPDR MSCI USA StrategicFactors ETF

SPDR Portfolio Intermediate Term Corporate Bond ETF

SPDR Portfolio Mortgage Backed Bond ETF

SPDR DoubleLine Total Return Tactical ETF

SPDR SSgA Ultra Short Term Bond ETF

As we consider the market trends, investors should anticipate what to look out for in 2020 and look for ways to construct a diversified portfolio with low-cost exchange traded fund strategies to gain efficient broad market exposure.

Low-Cost ETFs to Manage Risk, Gain Broad Market Exposure

Fixed-income investors should be prepared for negative rate world and consider suitable exchange traded fund strategies to incorporate into a diversified portfolio.

Yield-Generating Bond ETF Strategies for a Lower-for-Longer Outlook

News for SPDR SSgA Income Allocation ETF ETF (INKM)