ETF LAUNCH: Foreign Government Inflation-Index Bonds

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There is a new ETF launching today, and this one is a foreign government bond inflation-protected ETF.  State Street Global Advisors, the investment management arm of State Street Corporation (NYSE: STT) announced that the SPDR(R) DB International Government Inflation-Protected Bond ETF (Ticker: WIP) is set to begin trading on the American Stock Exchange.

The SPDR DB International Government Inflation-Protected Bond ETF, besides being a mouthful of words, is designed to track the performance of the DB Global Government ex-US Inflation-Linked Bond Capped Index.  The index includes 120 inflation-indexed bonds from 18 developed and emerging countries outside of the US.

In order to be included in this index, the bonds must be capital-indexed and linked to an eligible inflation index with at least one-year remaining to maturity.  They must also have a fixed, step-up, or zero notional coupon and must settle on or before the Index rebalancing date.  The Fund’s expense ratio is 0.50 percent.

Some ETF’s catch on like fire.  Others fail to gain major traction.  The more straightforward and the more simple ETF’s tend to see more liquidity than the complex and less direct ETF’s.   This one is more than fairly diverse and many will have a hard time tracking what all is in the ETF.

Jon C. Ogg
March 19, 2008