Insights

A Letter From Our CIO: Fixed Income Update

The year ahead will likely look markedly different from recent years. Volatility has already jumped in 2025 and may remain elevated as markets contend with the impact of tariffs, immigration laws, and restructuring efforts within specific government programs and agencies.

April 10, 2025

Matthew J Steinaway, CFA

CIO, Global Fixed Income, Currency & Cash

Despite, and perhaps because of, an uncertain economic outlook and volatile markets, we continue to see strong investor interest in fixed income across core exposures, spread sectors, and systematic and active investment styles.

We expect that the Federal Reserve will announce three interest rate cuts in 2025 given softening inflation and labor markets, and that Treasury yields will trend downwards. However, inflation is not yet fully tamed, and the impact of tariffs adds additional uncertainty.

Against this backdrop we remain focused on our mission to deliver exceptional value for our clients while developing new solutions that take advantage of the accelerating trend towards greater efficiency across the fixed income spectrum. Even as this trend progresses, pockets of inefficiency still exist, creating opportunity for skilled investors with the right tools and resources. Across both index and active, including systematic, our experience and scale allow us to continue innovating to deliver cutting edge strategies and exposures on behalf of our clients.

Innovation at SSGA

Consistent with our mission to harness the ongoing evolutions in fixed income on behalf of our clients, our global fixed income team continues to unlock and deliver new exposures in increasingly accessible ways . We have recently launched several innovative, cost-effective strategies that continue to redefine what is possible in fixed income. We highlight four below.

Systematic Active Fixed Income

Our systematic active capability brings together the quantitative research expertise of Barclays QPS and State Street Global Advisors’ leadership role in efficient implementation and precise exposure management in fixed income. Launched at the end of 2023, both strategies now have one full year of measured performance and have exceeded their alpha targets of 75-100 basis points, while remaining well within their TEV thresholds. While we acknowledge the short history, this strong start serves as a compelling proof of concept that the quantitative research and implementation expertise underpinning the strategies are very effective in the live environment

Leveraged Loans

In recognition of a surge in demand for leveraged loans and numerous client inquiries for an investible index vehicle, we created an institutional fund for indexed leveraged loans that provides investors with reliable exposure to the loans market at a fraction of the cost of active approaches and the competing index leveraged loan ETF. Our indexed loans strategy has already grown to over $1 billion in AUM, a notable accomplishment given it only launched in April of 2024, and is tracking as expected and in-line with the benchmark. We believe that our indexed loans strategy offers a compelling alternative from both a cost and performance perspective, relative to existing active and index approaches in the market.

MyIncome ETF suite

Last fall we launched the SPDR MyIncome ETF suite, which consists of 14 actively managed target maturity corporate and municipal funds. These funds use rigorous bottom-up credit analysis to invest in bonds with attractive credit characteristics while seeking to avoid securities with deteriorating quality outlooks. The MyIncome launch empowers investors to build their own custom bond ladder portfolio with the potential for higher yields, better risk management, and optimized cash flows.

Public/Private Credit ETF

In February 2025, we launched our PRIV ETF. This actively managed investment grade strategy combines public and private holdings to deliver the benefits of private credit to a wider swath of the investing public. PRIV leverages our relationship with Apollo and its proprietary platform of 16 origination companies to provide cost-efficient, liquid exposure in this fast-growing, and once exclusive, part of the debt markets.

Closing Thoughts

2024 was a year of innovation and growth. As we progress through 2025 we are energized by our mission and excited to continue delivering solutions that expand the boundaries of what is accessible for investors in fixed income. We remain humbled by the trust implicit in each ETF purchase and new mandate and will continue working to earn that trust throughout 2025 and beyond.

Getting there starts here.

Disclosure

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Disclaimer: Apollo is not a sponsor, distributor, promoter, or investment adviser to the Fund. Apollo has entered into a contractual agreement with the Fund whereby it is obligated to provide firm bids on asset-backed and corporate finance instruments sourced by Apollo (each an “AOS Investment”) to the Fund on a daily basis at certain intervals and is required to repurchase AOS Investments that the Fund has purchased at the firm bid price offered by Apollo, subject to, but not limited to, contractual levels designed to cover the estimated seven-day stress redemption rate as of the date hereof. The sale of AOS Investments to Apollo is not exclusive and the Fund may seek to sell AOS Investments to other counterparties.

Important Information

The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. Investing involves risk including the risk of loss of principal.

The views expressed are the views of the Global Fixed Income, Currency and Cash Group through March 21, 2025 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.

All information 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.

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 State Street Global Advisors’ express written consent.

Investing involves risk including the risk of loss of principal.

Diversification does not ensure a profit or guarantee against loss.

Market Risk: The Fund’s investments are subject to changes in general economic conditions, general market fluctuations and the risks inherent in investing in markets. Investment markets can be volatile and prices of investments can change substantially due to various factors including, but not limited to, economic growth or recession, changes in interest rates, inflation, changes in the actual or perceived creditworthiness of issuers, and general market liquidity.

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.

The Fund is actively managed. The Adviser’s judgments about the attractiveness, relative value, or potential appreciation of a particular sector, security, commodity or investment strategy may prove to be incorrect, and may cause the Fund to incur losses. There can be no assurance that the Adviser’s investment techniques and decisions will produce the desired results.

Debt Securities: The values of debt securities may increase or decrease as a result of the following: market fluctuations, changes in interest rates, actual or perceived inability or unwillingness of issuers, guarantors or liquidity providers to make scheduled principal or interest payments or illiquidity in debt securities markets; the risk of low rates of return due to reinvestment of securities during periods of falling interest rates or repayment by issuers with higher coupon or interest rates; and/or the risk of low income due to falling interest rates.

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.

Privately issued securities are securities that have not been registered under the Securities Act and as a result are subject to legal restrictions on resale. Privately-issued securities are not traded on established markets and may be illiquid, difficult to value and subject to wide fluctuations in value. Limitations on the resale of these securities may have an adverse effect on their marketability and may prevent the Fund from disposing of them promptly at reasonable prices. Private credit can range in credit quality depending on a variety of factors, including total leverage, amount of leverage senior to the security in question, variability in the issuer’s cash flows, the size of the issuer, the quality of assets securing debt and the degree to which such assets cover the subject company’s debt obligations. In addition, there can be no assurance that the Adviser will be able to secure all of the investment opportunities that it identifies for the Fund, or that the size of an investment opportunity available to the Fund will be as large as the Adviser would desire, on account of general economic conditions, specific market developments, or other circumstances outside of the Adviser’s control.

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 Fund may hold securities that have not been registered for sale to the public under the U.S. federal securities laws. There can be no assurance that a trading market will exist at any time for any particular restricted security. Limitations on the resale of these securities may have an adverse effect on their marketability, and may prevent the Fund from disposing of them promptly at reasonable prices. The Fund may have to bear the expense of registering the securities for resale and the risk of substantial delays in effecting the registration. Also, restricted securities may be difficult to value because market quotations may not be readily available, and the securities may have significant volatility.

Non-diversified fund may invest in a relatively small number of issuers. The value of shares of non-diversified funds may be more volatile than the values of shares of more diversified funds.

International government bonds and corporate bonds generally have more moderate short-term price fluctuations than stocks, but provide lower potential long-term returns.

Investing in foreign domiciled securities may involve risk of capital loss from unfavorable fluctuation in currency values, withholding taxes, from differences in generally accepted accounting principles or from economic or political instability in other nations.

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 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.

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.

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 or visit ssga.com. Read it carefully.

Not FDIC Insured
No Bank Guarantee
May Lose Value

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