Before setting the out of office, it would be worth considering how to position portfolios for the summer months and beyond. Importantly, fixed income investors must face the challenges of potentially more hawkish monetary policy and inflation uncertainty. In our Q3 Bond Compass, we look at three approaches to the current environment: emerging market debt, investment grade credit, and a barbell approach using short and long exposures for yield pick-up and protection.
It has been a strong start to the year for EM debt, with the Bloomberg EM Local Currency Liquid Index returning more than 6% in H1. This rise compares favourably to treasuries (+1.6%) and US investment grade credit (+3.2%). As we indicated in our note, Emerging Markets and How to Play Them, there have been previous periods when EM debt enjoyed high returns for sustained periods of time. The USD still looks around 10% expensive versus EM currencies1, meaning tailwinds from an ongoing, gradual USD depreciation coupled with high coupon yields should continue to support returns in H2 2023. The bigger question revolves around when EM central banks will start to ease policy.
The maturity of the EM hiking cycle and the fact that inflation pressures are now easing certainly creates the backdrop for easier policy. Moreover, the heavy inversion at the front end of many of the EM bond curves suggests that the market believes cuts are on the way. China has moved to ease policy already, but its economic trajectory has been a little different from most of the rest of the EM world. Hints from the Brazilian central bank of a late summer cut are potentially more indicative that the policy cycle is turning. The final piece of the puzzle could be the Fed. A little more than one rate rise is priced by the market and signals that this is the top to US rates should give EM central banks the confidence that they can cut rates and not see their currencies depreciate.
Policy divergence between emerging and developed markets also offers an additional bonus in the form of diversification. Correlations were high in 2022 with almost all assets declining in value. EM also suffered significant fall-out from the invasion of Ukraine. However, 2023 has seen the correlation of EM bonds to both Treasuries and US investment grade credit fall materially, which can help with portfolio diversification.
Risks Look Country-Specific
There are always idiosyncratic risks within EM – witness the negative returns of Turkey (-33%) that, while a relatively small part of the index (1.3%), have weighed on performance. With a new economic team in place at the Turkish central bank, there are hopes that the worst is now behind us and that this should be less of a drag on performance in Q3. However, there is a broader potential threat to EM from a US recession. State Street Global Advisors does not expect a recession to materialise until 2024 (see the Midyear 2023 Global Market Outlook) and, as noted above, EM central banks are in a far better position to cut rates in order to offset the impact of slower global growth. On aggregate, central bank rates are high from a historical perspective (Figure 2), meaning they can be cut by some margin and still be left at levels that can be viewed as fairly normal.
The market sees limited risks from either high current central bank rates or from a global slowdown on credit worthiness of EM nations. The average weighted 5-year CDS spread for the countries that make up the Bloomberg EM Local Currency Liquid Government Bond Index has fallen materially from its peak in October 2022.
How to Play this Theme
The first half of 2023 did not prove quite as lucrative for investors in investment grade (IG) exposures as many had been hoped at the start of the year. Still-resilient growth and the reluctance of inflation to rapidly retrace to lower levels has pushed up expectations for central bank policy rates and this has weighed on bonds. For US IG, the additional yield on credit coupled with a spread tightening to government bonds has allowed credit to outperform Treasury exposures with returns during H1 more than 160 bps above those from a Treasury only exposure2. In Europe, returns have been slightly lower for IG than government all-curve exposure, but this has been due to the considerably longer duration of the government index. Credit spreads have compressed, suggesting better performance from IG on a like-for-like basis.
Q3 could see the backdrop remain similar – inflation is falling, but only gradually. Growth is holding up well, especially in the US where, for instance, the Citi US Economic Surprise index has been in positive territory almost continually since early February3. This should continue to favour investors in IG exposures with the higher yields on offer, relative to government exposures, underpinning returns.
Indeed, the combination of rising yields and falling index durations leaves IG exposures looking significantly more defensive. Dividing the index yield by its duration gives a rough breakeven level for how much yields need to increase in order to negate the index yield. These breakevens have risen to what are historically high levels (Figure 1), highlighting the current defensiveness of credit. For euro exposures, market yields would need to increase by close to 100 bps to offset the positive gains from the index yield.
The risks to credit stem from a sharp economic slowdown or even a recession. The euro area is already in a technical recession and State Street Global Advisors expects the US recession to arrive in 2024 (see the Midyear 2023 Global Market Outlook). However, a material impact on the credit quality of issuers has yet to arrive, with the upgrades versus downgrades ratio still strong in North America and in Western Europe in particular.4
ESG is Back in the Game
After a tricky 2022, given the focus on energy, 2023 has seen an improvement in flows into ESG-based strategies. From a fundamental perspective, areas such as energy security, which could push more investment into renewables, and the excitement around the potential of AI has supported technology, an area that ESG exposures are often overweight in.
There is also some evidence that ESG screens have benefitted investors in times of volatility. Figure 2 shows the monthly excess returns of the Bloomberg SASB US Corporate ESG Ex-Controversies Select Index less those from the Bloomberg US Corporate Total Return Index. This should give an indication of the degree to which the selection of the bonds within the Bloomberg SASB index are adding to, or detracting from, performance relative to the standard market-weighted index.
There have been several instances where the excess returns from the Bloomberg SASB US Corporate ESG Ex-Controversies Select Index have clearly outstripped those of the market-weighted Bloomberg US Corporate Total Return Index. The most notable period was during the COVID crisis but there are also signs of outperformance in February/March 2022, when Ukraine was invaded, and then later in October 2022 as the bond sell-off reached its peak. Since the inception of the index (30 September 2019), it has delivered excess returns of 105 bps, or around 27 bps per annum, over the standard market-weighted index5.
The generation of excess returns is slightly lower from the Bloomberg SASB Euro Corporate ESG Ex-Controversies Select Index (around 8 bps per annum) but, with the geopolitical backdrop expected to remain volatile for the foreseeable future, there may be some advantages to taking an ESG-screened approach to investing.
The fixed income markets continue to fixate on the scenario where central banks are forced into an abrupt policy turn as growth slows. Coming into 2023, Federal Reserve rates were priced to hit 4.9% mid-year, following which expectations were that they would be cut to around 4.25% by year end. This has not materialized, with the fed funds rate in the 5.00-5.25% range and the market still priced for at least one further hike. The obsession with cuts continues, with the one-year forward of the one-month rate down at 4.5%.
This conviction that the turn in rates is just over the horizon has pushed the curve flatter and the resulting inversion of the 2s10s spread has left the belly of the curve looking relatively expensive. Figure 1 shows the spread for USD, EUR and GBP of the yield on the all-curve exposure minus that of the short and long indices6. The wings of the curve look relatively cheap, with the barbell at its lowest level in 10 years for EUR and GBP. All three curves have a negative spread, implying that a pick-up in yield can be obtained by moving out of the all-curve exposure and into the short and long buckets.
Short End for Yield, Long End for Duration and Convexity
Constructing a portfolio using short and long maturity buckets has its advantages. The inversion of the curve between 2 and 10 years of 75 bps for Germany, 85 bps for the UK and 105 bps7 in the US means that a heavier weight in short maturities provides a significant uplift to yield.
Conversely, the curve beyond 10 years is relatively flat, meaning there is little give-up of yield from moving longer. This also means that there is no compensation for taking on duration risk. However, with inflation coming down (and now below the fed funds rate) and policy tightening still feeding through, central bank rates do look close to their peak. In this context, some duration risk is desirable although maybe less so in the UK where there remains a considerable amount of tightening priced.
Figure 2: Combining Short and Long Exposures and How that Compares to the Whole Curve
|US Treasuries||Euro Govt||UK Govt|
Source: State Street Global Advisors, Bloomberg Finance L.P., as of 30 June 2023. Short + long bucket is 50/50 weighted. The data in the table above are as of the date indicated, are subject to change, and should not be relied upon as current thereafter.
Figure 2 shows the key characteristics of short, all-curve and long indices with the short + long barbell being a 50/50 combination of the short and long exposures. For all three curves, combining the short and long exposures results in a higher yield to worst than if the all-curve exposure were held. The trade-off is a longer duration profile, in the case of US Treasuries one that is 2.7 years longer. This also comes with an uplift to convexity above levels seen in the all-curve exposure. If we are close to the turn in policy rates then, in addition to a higher yield, the additional duration and convexity could produce higher returns from the barbell strategy than from the all-curve exposure. The additional convexity is of particular value, implying the duration of the barbell strategy will increase faster than the all-curve exposure if yields do decline.
Figure 3: Index Total Returns for Q2
|Returns (%)||Treasury||Euro Govt||UK Govt|
|Short + Long||-1.45||0.24||-5.67|
Source: Bloomberg Finance L.P., as of 30 June 2023. Short + long bucket is 50/50 weighted. Past performance is not a reliable indicator of future performance. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. All the index performance results referred to are provided exclusively for comparison purposes only. It should not be assumed that they represent the performance of any particular investment.
Perhaps the broader concern for investors is that the economic backdrop seen in Q2 persists. However, the fact that the curve has tended to invert when yields move higher means the long end has been less impacted. Figure 3 shows the Q2 total returns for the short, all-curve and long-maturity indices and then what that implies for the barbell. Even for the Treasury market, where the duration of the combined strategy is significantly longer, it underperformed the all-maturity index by just 7 bps during the quarter. The Euro and UK barbells both outperformed despite some heavily negative returns in the UK as the market moved to price in a significantly more aggressive rate profile for the Bank of England.
How to Play this Theme
1Source: State Street Global Advisors, as of 30 June 2023. Based on the model of long-term USD value run by State Street Global Advisors, the USD was 10.1% overvalued versus the basket of currencies that make up the Bloomberg EM Local Currency Liquid Government Bond Index.
2Source: Bloomberg Finance L.P., as of 30 June 2023. For H1 2023, the Bloomberg US Corporate Index returned 3.2% against 1.6% for the Bloomberg US Treasury Index. The 3Bloomberg Euro Aggregate Corporate Index returned 2.2% against 2.5% for the Bloomberg Euro Aggregate Treasury Index.
3Source: Bloomberg Finance L.P., as of 30 June 2023
4Source: Bloomberg Finance L.P., as at 30 June 2023. For Western Europe the upgrades/downgrades ratio was 5.4 for S&P and 7.4 for Moody’s for Q2. In North America it was 2.0 for S&P and 2.1 for Moody’s.
5Source: State Street Global Advisors, as of 26 June 2023.
6Barbell: All government curve exposure – 0.5*Short +0.5*Long. EUR and US 1-3Y and 10Y+ versus All curve, UK 0-5Y and 15Y+ versus all curve.
7Source: Bloomberg Finance L.P., as of 30 June 2023.
Information Classification: General Access
For Professional Clients Only
For Investors in Austria The offering of SPDR ETFs by the Company has been notified to the Financial Markets Authority (FMA) in accordance with section 139 of the Austrian Investment Funds Act. Prospective investors may obtain the current sales Prospectus, the articles of incorporation, the KID as well as the latest annual and semi-annual report free of charge from State Street Global Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89-55878-400. F: +49 (0)89-55878-440.
For Investors in Finland The offering of funds by the Companies has been notified to the Financial Supervision Authority in accordance with Section 127 of the Act on Common Funds (29.1.1999/48) and by virtue of confirmation from the Financial Supervision Authority the Companies may publicly distribute their Shares in Finland. Certain information and documents that the Companies must publish in Ireland pursuant to applicable Irish law are translated into Finnish and are available for Finnish investors by contacting State Street Custodial Services (Ireland) Limited, 78 Sir John Rogerson’s Quay, Dublin 2, Ireland.
For Investors in France This document does not constitute an offer or request to purchase shares in the Company. Any subscription for shares shall be made in accordance with the terms and conditions specified in the complete Prospectus, the KID, the addenda as well as the Company Supplements. These documents are available from the Company centralizing correspondent: State Street Banque S.A., Coeur Défense — Tour A — La Défense 4 33e étage 100, Esplanade du Général de Gaulle 92 931 Paris La Défense cedex France or on the French part of the site ssga.com. The Company is an undertaking for collective investment in transferable securities (UCITS) governed by Irish law and accredited by the Central Bank of Ireland as a UCITS in accordance with European Regulations. European Directive no. 2014/91/EU dated 23 July 2014 on UCITS, as amended, established common rules pursuant to the cross-border marketing of UCITS with which they duly comply. This common base does not exclude differentiated implementation. This is why a European UCITS can be sold in France even though its activity does not comply with rules identical to those governing the approval of this type of product in France.The offering of these compartments has been notified to the Autorité des Marchés Financiers (AMF) in accordance with article L214-2-2 of the French Monetary and Financial Code.
For Investors in Germany The offering of SPDR ETFs by the Companies has been notified to the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in accordance with section 312 of the German Investment Act. Prospective investors may obtain the current sales Prospectuses, the articles of incorporation, the KIDs as well as the latest annual and semi-annual report free of charge from State Street Global Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89-55878-400. F: +49 (0)89-55878-440.
Ireland Entity State Street Global Advisors Europe Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered Number: 49934. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300.
Israel: No action has been taken or will be taken in Israel that would permit a public offering of the Securities or distribution of this sales brochure to the public in Israel. This sales brochure has not been approved by the Israel Securities Authority (the ‘ISA’).
Accordingly, the Securities shall only be sold in Israel to an investor of the type listed in the First Schedule to the Israeli Securities Law, 1978, which has confirmed in writing that it falls within one of the categories listed therein (accompanied by external confirmation where this is required under ISA guidelines), that it is aware of the implications of being considered such an investor and consents thereto, and further that the Securities are being purchased for its own account and not for the purpose of re-sale or distribution.
This sales brochure may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have been sent.
Nothing in this sales brochure should be considered investment advice or investment marketing as defined in the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (“the Investment Advice Law”). Investors are encouraged to seek competent investment advice from a locally licenced investment advisor prior to making any investment. State Street is not licenced under the Investment Advice Law, nor does it carry the insurance as required of a licencee thereunder.
This sales brochure does not constitute an offer to sell or solicitation of an offer to buy any securities other than the Securities offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person or persons to whom it is unlawful to make such offer or solicitation.
Italy Entity State Street Global Advisors Europe Limited, Italy Branch (“State Street Global Advisors Italy”) is a branch of State Street Global Advisors Europe Limited, registered in Ireland with company number 49934, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson’s Quay, Dublin 2. State Street Global Advisors Italy is registered in Italy with company number 11871450968 — REA: 2628603 and VAT number 11871450968, and its office is located at Via Ferrante Aporti, 10 - 20125 Milan, Italy. T: +39 02 32066 100. F: +39 02 32066 155.
For Investors in Luxembourg The Companies have been notified to the Commission de Surveillance du Secteur Financier in Luxembourg in order to market their shares for sale to the public in Luxembourg and the Companies are notified Undertakings in Collective Investment for Transferable Securities (UCITS).
For Investors in the Netherlands This communication is directed at qualified investors within the meaning of Section 2:72 of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht) as amended. The products and services to which this communication relates are only available to such persons and persons of any other description should not rely on this communication. Distribution of this document does not trigger a licence requirement for the Companies or SSGA in the Netherlands and consequently no prudential and conduct of business supervision will be exercised over the Companies or SSGA by the Dutch Central Bank (De Nederlandsche Bank N.V.) and the Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten). The Companies have completed their notification to the Authority Financial Markets in the Netherlands in order to market their shares for sale to the public in the Netherlands and the Companies are, accordingly, investment institutions (beleggingsinstellingen) according to Section 2:72 Dutch Financial Markets Supervision Act of Investment Institutions.
For Investors in Norway The offering of SPDR ETFs by the Companies has been notified to the Financial Supervisory Authority of Norway (Finanstilsynet) in accordance with applicable Norwegian Securities Funds legislation. By virtue of a confirmation letter from the Financial Supervisory Authority dated 28 March 2013 (16 October 2013 for umbrella II) the Companies may market and sell their shares in Norway.
For Investors in Spain State Street Global Advisors SPDR ETFs Europe I and II plc have been authorised for public distribution in Spain and are registered with the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores) under no.1244 and no.1242. Before investing, investors may obtain a copy of the Prospectus and Key Information Documents, the Marketing Memoranda, the fund rules or instruments of incorporation as well as the annual and semi-annual reports of State Street Global Advisors SPDR ETFs Europe I and II plc from Cecabank, S.A. Alcalá 27, 28014 Madrid (Spain) who is the Spanish Representative, Paying Agent and distributor in Spain or at spdrs.com. The authorised Spanish distributor of State Street Global Advisors SPDR ETFs is available on the website of the Securities Market Commission (Comisión Nacional del Mercado de Valores).
For Investors in Switzerland The collective investment schemes referred to herein are collective investment schemes under Irish law. Prospective investors may obtain the current sales prospectus, the articles of incorporation, the KID as well as the latest annual and semi-annual reports free of charge from the Swiss Representative and Paying Agent, State Street Bank International GmbH, Munich, Zurich Branch, Beethovenstr. 19, 8027 Zurich, as well as from the main distributor in Switzerland, State Street Global Advisors AG, Beethovenstrasse 19, 8027 Zurich. Before investing please read the prospectus and the KID, copies of which can be obtained from the Swiss representative, or at www.ssga.com.
For Investors in the UK The Funds have been registered for distribution in the UK pursuant to the UK’s temporary permissions regime under regulation 62 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019. The Funds are directed at ‘professional clients’ in the UK (as defined in rules made under the Financial Services and Markets Act 2000) who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates are only available to such persons and persons of any other description should not rely on this communication. Many of the protections provided by the UK regulatory system do not apply to the operation of the Funds, and compensation will not be available under the UK Financial Services Compensation Scheme.
This document has been issued by State Street Global Advisors Europe Limited (“SSGAEL”), regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered number 49934. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300. Web: ssga.com.
This document has been issued by State Street Global Advisors Europe Limited (“SSGAEL”), regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered number 49934. T: +353 (0)1 776 3000. Fax: +353 (0)1 776 3300. Web: ssga.com.
Responsible-Factor (R-Factor) scoring is designed by State Street to reflect certain ESG characteristics and does not represent investment performance. Results generated out of the scoring model is based on sustainability and corporate governance dimensions of a scored entity.
Currency Risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
ETFs trade like stocks, are subject to investment risk and will fluctuate in market value. The investment return and principal value of an investment will fluctuate in value, so that when shares are sold or redeemed, they may be worth more or less than when they were purchased. Although shares may be bought or sold on an exchange through any brokerage account, shares are not individually redeemable from the fund. Investors may acquire shares and tender them for redemption through the fund in large aggregations known as “creation units.” Please see the fund’s prospectus for more details.
SPDR ETFs is the exchange traded funds (“ETF”) platform of State Street Global Advisors and is comprised of funds that have been authorised by Central Bank of Ireland as open-ended UCITS investment companies.
State Street Global Advisors SPDR ETFs Europe I & SPDR ETFs Europe II plc issue SPDR ETFs, and is an open-ended investment company with variable capital having segregated liability between its sub-funds. The Company is organised as an Undertaking for Collective Investments in Transferable Securities (UCITS) under the laws of Ireland and authorised as a UCITS by the Central Bank of Ireland.
Investing involves risk including the risk of loss of principal.
Diversification does not ensure a profit or guarantee against loss.
The trademarks and service marks referenced herein are the property of their respective owners. Third party data providers make no warranties or representations of any kind relating to the accuracy, completeness or timeliness of the data and have no liability for damages of any kind relating to the use of such data.
The information provided does not constitute investment advice as such term is defined under the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell any investment. It does not take into account any investor’s or potential investor’s particular investment objectives, strategies, tax status, risk appetite or investment horizon. If you require investment advice you should consult your tax and financial or other professional advisor.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
Investing in foreign domiciled securities may involve risk of capital loss from unfavourable fluctuation in currency values, withholding taxes, from differences in generally accepted accounting principles or from economic or political instability in other nations.
Investments in emerging or developing markets may be more volatile and less liquid than investing in developed markets and may involve exposure to economic structures that are generally less diverse and mature and to political systems which have less stability than those of more developed countries.
The views expressed in this material are the views of SPDR EMEA Strategy and Research through 7 July 2023 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
BLOOMBERG®, a trademark and service mark of Bloomberg Finance L.P., and its affiliates have each been licenced for use in connection with the listing and trading of the SPDR Bloomberg ETFs. SASB does not take any position as to whether an issuer should be included or excluded from the Underlying Index.
Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates rise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.
The S&P 500® Index is a product of S&P Dow Jones Indices LLC or its affiliates (“S&P DJI”) and have been licensed for use by State Street Global Advisors. S&P®, SPDR®, S&P 500®,US 500 and the 500 are trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and has been licensed for use by S&P Dow Jones Indices; and these trademarks have been licensed for use by S&P DJI and sublicensed for certain purposes by State Street Global Advisors. The fund is not sponsored, endorsed, sold or promoted by S&P DJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of these indices.
International Government bonds and corporate bonds generally have more moderate short-term price fluctuations than stocks, but provide lower potential long-term returns.
All the index performance results referred to are provided exclusively for comparison purposes only. It should not be assumed that they represent the performance of any particular investment.
Investing in high yield fixed income securities, otherwise known as “junk bonds”, is considered speculative and involves greater risk of loss of principal and interest than investing in investment grade fixed income securities. These Lower-quality debt securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio’s specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio’s ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
Please refer to the Fund’s latest Key Information Document (KID)/Key Investor Information Document (KIID) and Prospectus before making any final investment decision. The latest English version of the prospectus and the KID/KIID can be found at ssga.com. A summary of investor rights can be found here: ssga.com/ library-content/products/fund-docs/summary-of-investor-rights/ ssga-spdr-investors-rights-summary.pdf.
Note that the Management Company may decide to terminate the arrangements made for marketing and proceed with de-notification in compliance with Article 93a of Directive 2009/65/EC.
The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.
The Fund/share class may use financial derivatives instruments for currency hedging and to manage the portfolio efficiently. The Fund may purchase securities that are not denominated in the share class currency. Hedging should mitigate the impact of exchange rate fluctuations however hedges are sometimes subject to imperfect matching which could generate losses.
EXP: 31 October 2023
© 2023 State Street Corporation - All Rights Reserved.