SPDR® DoubleLine® Total Return Tactical ETF – Q4 2020 Commentary
Performance During the fourth quarter of 2020, the SPDR DoubleLine Total Return Tactical ETF (TOTL) outperformed the Bloomberg Barclays US Aggregate Bond Index return of 0.67%. The outperformance was driven by the portfolio’s shorter duration positioning and asset allocation mix. The fund benefitted from its exposure to high-yield corporate credit, emerging market debt, and structured product risk sectors.
High-yield corporate debt was the best performing sector over the period, driven by continued spread tightening on better-than-expected corporate earnings as the pandemic continues to create bifurcation within the high yield sector. Emerging market debt was a benefactor of a weakening US Dollar and rising commodity prices. Investment-grade corporate bonds and bank loans continue to see strength from the improved underlying view of fundamental corporate risk since the COVID related tumult.
Agency-backed securities (ABS) and commercial mortgage-backed securities (CMBS) benefitted from the announcement of a COVID-19 vaccine that increased investor expectations of a recovery in economic activity. Non-agency residential mortgage-backed securities (RMBS) experienced price increases as market participants continue to expect further improvement in credit fundamentals as anticipated progress materialized. US Treasuries and agency MBS saw relatively weak performance as the Treasury curve steepened surrounding additional fiscal stimulus.