Global X Debuts 3 Bond Ladder ETFs as Rate Cuts Loom
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Global X ETFs is leaning into the growing appetite for fixed income strategies with three new ETFs offering targeted exposure to specific segments of the Treasury yield curve.
The Global X Short-Term Treasury Ladder ETF (SLDR) tracks the FTSE US Treasury 1-3 Years Laddered Bond Index.
The Global X Intermediate-Term Treasury Ladder ETF (MLDR) tracks the FTSE US Treasury 3-10 Years Laddered Bond Index.
And the Global X Long-Term Treasury Ladder ETF (LLDR) tracks the FTSE US Treasury 10-30 Years Laddered Bond Index. All three ETFs charge 12 basis points.
The laddered bond strategies are designed to help investors and financial advisors navigate bond portfolios through a potential cycle of interest rate cuts by the Federal Reserve, the first of which is expected later this month.
“Bond ladders can help mitigate reinvestment risk, and with uncertainty about the trajectory of interest rates at a high level right now, these ETFs are debuting at an opportune time,” said Sumit Roy, senior ETF analyst at etf.com.
By laddering the underlying bonds, investors will be able to lock in current yields while managing duration and reinvestment risk, according to Global X.
The Treasury ladder portfolios span a range of maturities. Each maturity is considered a rung on the ladder, and typically each rung is equally weighted in proportion to one another.
Combined, the equally weighted collection of bond rungs forms the bond ladder.
As bonds mature or approach maturity, the assets are automatically rolled to the next rung of the ladder.
Many Uses for Laddered Bond Strategies
Robert Scrudato, director of options and income research at Global X, said the suite represents the ETF issuer’s first laddered bond strategies, where he sees a “pretty broad range of potential use cases.”
"The Federal Reserve appears set to cut rates, and in such an environment these ETFs may appeal to investors who are seeking periodic cash flows,” he said. “This could appeal to retail investors who might not be able to put something like this together on their own as well as institutional investors who want to diversify across the broader yield curve.”
New York-based Global X, which is part of Mirae Asset Financial Group, manages more than $50 billion across 95 exchange-traded funds.