Active Sector Rotation ETFs Unveiled

April 04, 2019

Yesterday, State Street Global Advisors rolled out a pair of sector rotation ETFs managed by its Investment Solutions group. The SPDR SSGA US Sector Rotation ETF (XLSR) and SPDR SSGA Fixed Income Sector Rotation ETF (FISR) both rely on tactical allocation strategies and are structured as ETFs of ETFs.

XLSR comes with an expense ratio of 0.70%, while FISR charges 0.50%. Both list on the NYSE Arca.

Methodology

The equity fund will invest in ETFs that capture the performance of different GICS-based sectors of the S&P 500, selecting its positions based on a quantitative model that relies on macroeconomic, financial and market data, according to the prospectus. It’s likely the fund will invest mainly in Select Sector SPDR ETFs, given those funds are part of the State Street lineup and cover sectors of the S&P 500.

The fixed-income fund will invest in ETFs covering various portions of the fixed-income market, including U.S. government-related debt, inflation-protected Treasury debt, corporate debt, U.S. mortgage-backed securities, high-yield debt, international debt, floating-rate bank loans, other floating-rate debt and cashlike securities, the prospectus says.

FISR uses a similar model as XLSR’s to make its allocation decisions, and for both funds, the prospectus notes the manager can refrain from fully reflecting the indications of the models if they do not believe it appropriate.

Contact Heather Bell at [email protected]

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