A sound investment process and strong management team underpin SPDR® Portfolio Intmdt Term Trs ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy merits an Above Average Process Pillar rating. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People, Process 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

Vanguard’s manager employs representative sampling to track the Bloomberg US Treasury 3-10 Year Index, which includes Treasury bonds whose remaining maturities range from three to 10 years. Qualifying bonds must have at least $300 million in outstanding face value. The index is market-value-weighted and rebalances each month. This results in a conservative portfolio that limits return potential but also caps risk.

Investors in the fund enjoy virtually zero credit risk since it holds Treasuries exclusively. Many peers reach into the securitized bucket to generate extra return, which can hurt competitors when credit spreads widen but help when they narrow. The typical peer’s stake in securitized assets has fallen in recent months but still stood at more than 50% as of March 31, 2023.

The portfolio experiences less turnover on average than the category norm. The typical peer’s annual portfolio turnover routinely runs well above 100% compared with this fund’s 37% average annual turnover since 2012. This means the category’s complexion changes more frequently than this fund and can lead to disparate risk and performance patterns. For example, the fund has historically taken on more interest-rate risk than the category norm, but this changed in early 2022 when category peers increased their allocation to longer-duration bonds. While this portfolio remains relatively constant, category-relative returns are determined by the risks peers are willing to take.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a passively managed vehicle that tracks a particular index, Morningstar associates the Process Pillar rating assigned to that vehicle with the index concerned. Morningstar then maps the Process Pillar associated with a given index to any other uncovered passive strategies that track the same index. This ensures that the analyst’s view is leveraged whenever available and promotes consistency when analyzing passive vehicles associated with a given index.

Above Average

Process

State Street’s fixed income team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are two managers listed on the fund: Cynthia Moy, Joanna Madden. Experience on the team is abundant, with 12 years of average portfolio management experience. Together, they manage a total of three strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

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

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