Going the Distance with SPTL

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

In today’s economy, investors are looking for exchange-traded funds (ETFs) that can go the distance and ride out what may be an impending recession.

Looking forward, the macroeconomic environment likely will be shaped by three key elements: slowing growth, falling inflation and central bank rate cuts. If this is indeed the case, longer-dated, fixed-income exchange-traded funds (ETFs) should outperform.

One way for investors to take advantage of that outlook is through several best-of-breed investment vehicles for embracing duration in bond portfolios. The first of those investments is SPDR Portfolio Long Term Treasury ETF (SPTL).

SPTL is a low-cost ETF that seeks precise and comprehensive exposure to the entire long-term U.S. Treasury spectrum of bonds with remaining maturities of 10 years or more — excluding inflation-protected bonds. The fund uses a sampling method to track its index, the Bloomberg Long U.S. Treasury Index.

Simply, the fund invests in a sample of securities that collectively have an investment profile like the benchmark. While SPTL is one of the lower-cost core SPDR Portfolio ETFs, its long-effective duration, weighted-average maturity and yield-to-maturity naturally may expose investors to elevated interest-rate risk. But it’s no more risk than is expected in the market.

SPTL has $5.74 billion in net assets and a low expense ratio of 0.06%. As is visible in the chart below, the fund showed a sharp decline last October but recouped a fair amount of ground by December.

Courtesy of Stockcharts.com.

Overall, SPTL is a cost-efficient ETF offering investors comprehensive exposure to the U.S. Treasury spectrum of bonds with remaining maturities of 10 years or more. While SPTL may be more sensitive to interest-rate fluctuations than vehicles with a shorter duration, it is nothing extraordinary.

So, for investors looking for a best-of-breed investment vehicle to go the distance, the SPDR Portfolio Long Term Treasury ETF may be worth considering.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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