Investors have been embracing actively managed fixed income ETFs in 2024. So it is not surprising that the category is an area of focus for product development. The latest suite of active ETFs to catch my eye are from State Street Global Advisors.
The top-tier ETF provider launched 14 target maturity fixed income ETFs in September as part of a broader product expansion. Nine of these invest in corporate bonds that mature in individual years between 2026 and 2034. The remaining five own municipal bonds with vintages of 2026-2030.
Target maturity bond ETFs have been around for years from Invesco and iShares. Indeed, they are quite popular. For example, the Invesco BulletShares 2026 Corporate Bond ETF (BSCQ ) and the iShares iBonds Dec 2026 Term Corporate Bond ETF (IBDR ) manage $3.8 billion and $2.9 billion, respectively. They both launched in 2016 and take an index-based approach. Both Invesco and iShares have a broad suite of popular target maturity ETFs.
Diversification is a key appeal of these funds. IBDR holds more than 650 bonds, while BSCQ holds over 450. The credit risks are reduced by spreading assets across issuers and sectors.
“Building a bond ladder by investing in target maturity ETFs is potentially helpful for retirees seeking predictability as they plan for the next chapter of their retirement years, without having to manage a portfolio of individual bonds,” said Anna Paglia, chief business officer for State Street Global Advisors.
MYCF's Active Management
However, what makes the SPDR SSGA My2026 Corporate Bond ETF (MYCF ) different from its 2026 peers is the use of active management. According to State Street Global Advisors, the fund uses a risk-aware, top-down approach combined with bottom-up security selection through fundamental research. Management constructs a portfolio that seeks to overweight the most attractive sectors and issuers.
On the State Street Global Advisor website, MYCF had 29% of its assets in banking, 13% in consumer non-cyclical, and 8% in technology. Relative to its ICE benchmark, the ETF was overweight banking and underweight technology.
However, there was a more notable difference at the credit quality level. The fund was overweight Baa-rated bonds (65% of assets vs. 46% for the benchmark) and underweighted to A-rated (33% vs. 42%). MYCF had less than 1% in bonds rated Aa that represented 11% of the ICE index.
“An active approach can seek to enhance the income profile of a target maturity ETF portfolio by utilizing sector, issuer, and credit curve selection processes,” explained Matt Bartolini, Head of Americas Research at State Street Global Advisors. “All the while managing for liquidity, sector, issuer concentration risks as well as broader macro risks.
“Additionally, our active approach provides greater flexibility related to cash management due to the ability to minimize the fund’s cash drag. These funds will actively reinvest the higher levels of cash in the fund from underlying maturity bonds as the maturity date of the ETF itself approaches,” Bartolini added.
A full list of the target maturity ETFs from the three firms can be found here, here, and here.
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