State Street Global Advisors, the asset management business of State Street, has launched the SPDR Barclays Capital Short Term High Yield Bond ETF on the NYSE Arca.

The ETF offers investment into high-yield corporate bonds with short durations, which the firm claims are less volatile and sensitive to interest rate changes than their longer-duration counterparts.

The fund has an annual expense ratio of 0.4 per cent and seeks to track the performance of the Barclays Capital 0-5 Cash Pay Constrained High Yield Index, which includes publicly-issued, US dollar-denominated, fixed rate, non-investment grade, taxable corporate bonds with maturities under five years. The securities are rated high yield using the middle rating of Moody’s Investors Service, Fitch, or Standard & Poor’s, and have $350 million or more of issuance.

The launch is designed to provide equity-like returns with less volatility, and protect against an “inevitable rise in interest rates,” said James Ross, senior managing director and global head of SPDR exchange traded funds at SSGA.

The firm now offers 34 ETFs, with assets under management in these products of $274 globally, as of 31 December 2011.