Morningstar - Q2 2022 - 56

Strategies
Broad Base at a Low Cost
SPDR Portfolio Aggregate Bond ETF has a long-term edge
over peers.
Lan Anh Tran
BEST IDEAS: PASSIVE
This article is adapted from the ETF's Morningstar Global Fund Report dated
April 7, 2022.
SPDR Portfolio Aggregate Bond ETF SPAB offers a broad portfolio of
high-quality U.S. bonds at a low cost, which should help it outperform category
peers in the long run. The fund earns a Morningstar Analyst Rating
of Gold.
The fund employs a sampling strategy to track the Bloomberg U.S. Aggregate
Bond Index, which captures investment-grade, fixed-rate, taxable U.S.
bonds. While the index includes a wide range of bonds, it excludes
certain types, such as inflation-linked bonds, non-Erisa-eligible commercial
mortgage-backed securities, and bonds with equity features such as
convertibles and warrants. Market-cap weighting tilts the fund toward the
largest issuers, resulting in a higher allocation to U.S. Treasuries than
its category peers. The rest of the fund's assets mostly lie in investment-grade
corporate bonds and agency MBS.
The fund has historically overweighted the highest rung of the investmentgrade
space. As of February 2022, it parked around 70% of its assets
in AAA rated issues compared with 60% for the category average. This results
in a more conservative risk profile than most of its peers, which can
help its performance during credit shocks. For example, the fund offered
superior protection during both the 2008 global financial crisis and
the March 2020 COVID-19 drawdown. However, the fund may lag peers when
credit risk pays off, such as during the latter half of 2020. Its active
peers can benefit from being able to lean further into riskier assets in
these environments.
The main source of the fund's risk comes from interest-rate sensitivity. Because
it captures the broad market, the fund's composition depends on issuance
activities, which have tilted toward bonds with longer maturities in recent
years. As of February 2022, the fund's effective duration was around 6.5 years,
which was slightly higher than its average peer. As a result, the fund tends
to lag its peers when interest-rate risk increases. K
Lan Anh Tran is an associate manager research analyst at Morningstar Research Services LLC.
SPDR® Portfolio Aggregate Bond ETF SPAB
Stats 03/31/2022
Morningstar Analyst Rating
Œ
Total Assets
$6,504 Million
Process
Above Avg
Growth of 10K 09/31/2021
$12K
Morningstar US Core Bd TR Hdg USD
SPDR® Portfolio Aggregate Bond ETF
10.49
10.50
10
11
8
9
04/2019
Limited
Interest Rate Sensitivity
04/2020
Morningstar Style Box 03/31/2022
Moderate Extensive
Snapshot as
of most recent
portfolio.
04/2021
Morningstar Ratings 03/31/2022
Period
Mstar
Return
3-Yr Average
5-Yr Average
10-Yr Average
Overall Rating
Top 5 Sectors 03/31/2022
■ Investment % ❙ Index %
Government
Municipal
Corporate
Securitized
Cash & Equivalents
56
Morningstar Q2 2022
43.04 45.79
0.06 0.42
22.93
0.00 3.55
10
24.27
28.73
20
30
31.22
40
50
Mstar
Risk
Morningstar Category
Intermediate Core Bond
3-Yr Annlzd Return
2.08%
Morningstar Pillars 03/31/2022
People
Above Avg
Parent
Above Avg
Expense Ratio
0.03%
3-Yr % Rank in Cat
49
Mstar
Rating
Below Avg QQQ
Average QQQ
Average QQQ
QQQ
Low
Credit Quality
Medium
High

https://www.morningstar.com/authors/2404/lan-anh-tran https://www.morningstar.com/etfs/arcx/spab/quote https://www.morningstar.com/authors/2404/lan-anh-tran

Morningstar - Q2 2022

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