SPDR® SSGA Income Allocation ETF – Q4 2020 Commentary
During the fourth quarter of 2020, INKM finished up in absolute returns and outperformed its custom strategic benchmark. The fund finished the quarter with a sizable overweight to US equity and a modest allocation to credit bonds.
Performance An increased allocation to equities in November was beneficial. While equity markets rose most vigorously in the wake of election results and vaccine news in early November, our addition to equities as risk appetite started to improve later in the month allowed us to take advantage of continued strong gains through the end of the year. Elsewhere, positioning within fixed income aided performance. Our preference for credit assets at the expense of long Treasury bonds helped as credit spreads continued to tighten – despite the looming expiration of certain Fed facilities. Our underweight to US REITs hurt performance during Q4 amidst the vaccine-induced spike in value-oriented exposures and other reopening plays. REITs performed well along with other equities in Q4 and our large underweight had a negative impact, especially when compared to cross-asset alternatives like bonds/cash, which were flat to slightly up over the period.