State Street launches SPDR’s first fixed income ETF built on liquidity

Rick Steves

This innovative SPDR ETF is designed to provide bond investors with access to U.S. corporate bonds with higher relative liquidity and tradability.

State Street Global Advisors has launched the SPDR MarketAxess Investment Grade 400 Corporate Bond ETF (LQIG), which is designed to blend the advantages of an ETF with the tradability benefits of investing in US Investment grade corporate bonds with higher liquidity compared to the broader U.S. corporate bond market.

The new product, LQIG,  offers credit exposure with the potential for tighter bid-ask spreads, lower premium/discounts, and more transparency into the underlying holdings’ real-time valuations, according to the asset management business of State Street.

Powered by MarketAxess’ proprietary liquidity and pricing data

As fixed income markets evolve with smarter electronic trading protocols, automated investment strategies and better data, the MarketAxess US Investment Grade 400 Corporate Bond Index enters the stage with a more data-driven approach to indexation.

The SPDR MarketAxess Investment Grade 400 Corporate Bond ETF tracks the abovementioned index, which is said to be paving the way for improved index and portfolio construction.

The index is powered by MarketAxess’ proprietary liquidity and pricing data – Relative Liquidity Score and Composite+™ pricing engine – and combines actionable liquidity with broad market exposure.

MarketAxess’ data capabilities support real-time pricing, liquidity assessment and valuation, allowing for greater transparency and tradability.

Rory Tobin, Global Head of SPDR ETF Business at State Street Global Advisors, said: “The growth of electronic bond trading volume coupled with the increasing adoption of fixed income ETFs is bringing the benefits of bond liquidity to all investors. Given State Street’s heritage as a liquidity leader in the ETF market, we’re excited to be working with MarketAxess, one of the world’s largest electronic fixed income trading venues, to launch LQIG. This innovative SPDR ETF is designed to provide bond investors with access to U.S. corporate bonds with higher relative liquidity and tradability.”

Chris Concannon, President and Chief Operating Officer at MarketAxess, commented: “Most fixed income indices are designed to reflect an investment with broad market exposure and not for tradable products where the underlying components are regularly available. By contrast, the MarketAxess U.S. Investment Grade 400 Corporate Bond Index, launched last month, prioritizes liquidity, transparency, and a high availability of the constituent bonds. We believe the launch of LQIG will be instrumental in supporting increased tradability in the traditionally fragmented and less liquid fixed income market.”

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