Performance For the quarter ending March 31, 2021, the DoubleLine Emerging Markets Fixed Income ETF outperformed the J.P. Morgan CEMBI Broad Diversified Index return of -0.80%. The outperformance was driven by the portfolio’s allocation to High Yield corporate credit and partially mitigated by an overweight allocation to Latin American credit.
Over the quarter, the dollar softened, commodity prices generally rose, and investors continued to increase their appetite for risk. The portfolio maintained an overweight allocation to Latin American credit, the worst performing region over the period, but initiated an overweight allocation to Asian credit. All regions, except Latin America, contributed positively to the portfolio’s performance. The spread of the J.P. Morgan CEMBI Broad Diversified Index tightened by 12 basis points (bps) over the quarter, to finish March at 258 bps. The duration of the portfolio lengthened considerably over the quarter, gaining 4.0 years to end at 7.3.1 This lengthening of duration was a result of increasing sovereign and quasi-sovereign allocations.
Quarter in Review The duration of the portfolio increased to 7.3 years. The portfolio increased sovereign and quasi-sovereign exposure by 4.0% and 0.8%, respectively, over the quarter. The portfolio decreased corporate credit exposure by 4.3% over the quarter.
Portfolio Positioning and Outlook The calendar year of 2021 is expected to be a year of economic resurgence. The Federal Reserve currently forecasts Real GDP to grow by 6.5% year-over-year, a rate not seen since 1984. Fiscal policy has been a key driver in boosting consumer savings rates during the pandemic and we expect to see a material increase in consumer spending through the second half of 2021 as state economies reopen. With the energy prices well above their 2020 values, we believe annual inflation could break above three percent this year. Positive developments within the COVAX vaccination program, led by the World Health Organization, will contribute to further risk-on sentiment in the near term in lower income countries with limited direct access to vaccines.
Country and Region Weights
United Arab Emirates
Cash & Accrued
Latin America and the Caribbean
Africa and the Middle East
Cash & Accrued
Source: DoubleLine, State Street Global Advisors, as of March 31, 2021. Allocations are as of the date given and should not be relied upon as current thereafter.
1DoubleLine Capital L.P. as of March 31, 2021.
Credit Spreads The spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating.
Emerging Market Fixed Income International bonds issued by governments or corporations located in emerging market countries that are considered sovereign (issued in something other than local currency).
High Yield Based on the two main credit rating agencies, high-yield bonds carry a rating below “BBB” from S&P, and below “BAA” from Moody’s. Bonds with ratings at or above these levels are considered investment grade. To compensate for the added risk, yields will typically be higher than investment-grade issues.
Investment-Grade Corporate Credit A corporate bond with a rating that indicates that it has a relatively low risk of default. Bond rating firms, such as Standard & Poor’s, use different designations consisting of upper- and lower-case letters “A” and “B” to identify a bond’s credit quality rating. “AAA” and “AA” (high credit quality) and “A” and “BBB” (medium credit quality) are considered investment grade.
JP Morgan Corporate Emerging Market Bond Index Broad Diversified A benchmark of US dollar denominated corporate bonds issued by emerging market entities. The index is an expansion of the JP Morgan Corporate Emerging Markets Bond Index (CEMBI). The CEMBI is a market capitalization weighted index consisting of US dollar denominated emerging market corporate bonds.
Yield Curve A line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year and 30-year US Treasury debt.
Investing involves risk including the risk of loss of principal.
This communication is not intended to be an investment recommendation or investment advice and should not be relied upon as such.
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.
Actively managed funds do not seek to replicate the performance of a specified index. An actively managed fund may underperform its benchmark. An investment in the fund is not appropriate for all investors and is not intended to be a complete investment program. Investing in the fund involves risks, including the risk that investors may receive little or no return on the investment or that investors may lose part or even all of the investment.
Bank loans are subject to credit, interest rate, income and prepayment risks. The fund may invest in secured and unsecured participations in bank loans. Participation loans are loans made by multiple lenders to a single borrower, e.g., several banks participate in one large loan with one of the banks taking the role of the lead bank. The lead bank recruits other banks to participate and share in the risks and profits. There is also the risk that the collateral may be difficult to liquidate or that a majority of the collateral may be illiquid. In participation, the fund assumes the credit risk of the lender selling the participation in addition to the credit risk of the borrower.
Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates raise, 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. High-yield securities may be subject to greater risks (including the risk of default) than other fixed-income securities.
Foreign investments involve greater risks than US investments, including political and economic risks and the risk of currency fluctuations, all of which may be magnified in emerging markets.
Sovereign bonds are issued by governments and government agencies and instrumentalities, which may be unable or unwilling to repay principal or interest on debt obligations in times of economic uncertainty.
DoubleLine® is a registered trademark of DoubleLine Capital LP. The advisor, State Street Global Advisors Funds Management, Inc., has retained DoubleLine Capital LP as the sub-advisor. DoubleLine LP and State Street Global Advisors Funds Distributors, LLC are not affiliated.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns.
Standard & Poor's®, S&P® and SPDR® are registered 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 these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation's financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
Distributor: State Street Global Advisors Funds Distributors, LLC, member FINRA, SIPC, an indirect wholly owned subsidiary of State Street Corporation. References to State Street may include State Street Corporation and its affiliates. Certain State Street affiliates provide services and receive fees from the SPDR ETFs. ALPS Distributors, Inc., member FINRA, is the distributor for DIA, MDY and SPY, all unit investment trusts. ALPS Portfolio Solutions Distributor, Inc., member FINRA, is the distributor for Select Sector SPDRs. ALPS Distributors, Inc. and ALPS Portfolio Solutions Distributor, Inc. are not affiliated with State Street Global Advisors Funds Distributors, LLC.
THIS SITE IS INTENDED FOR QUALIFIED INVESTORS ONLY.
No Offer/Local Restrictions
Nothing contained in or on the Site should be construed as a solicitation of an offer to buy or offer, or recommendation, to acquire or dispose of any security, commodity, investment or to engage in any other transaction. SSGA Intermediary Business offers a number of products and services designed specifically for various categories of investors. Not all products will be available to all investors. The information provided on the Site is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
All persons and entities accessing the Site do so on their own initiative and are responsible for compliance with applicable local laws and regulations. The Site is not directed to any person in any jurisdiction where the publication or availability of the Site is prohibited, by reason of that person's nationality, residence or otherwise. Persons under these restrictions must not access the Site.
Information for Non-U.S. Investors:
The products and services described on this web site are intended to be made available only to persons in the United States or as otherwise qualified and permissible under local law. The information on this web site is only for such persons. Nothing on this web site shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.
Before investing, consider the funds' investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus which contains this and other information, call 1-866-787-2257, download a prospectus or summary prospectus now, or talk to your financial advisor. Read it carefully before investing.
Not FDIC Insured * No Bank Guarantee * May Lose Value