State Street Global Advisors has announced the start of trading for a new municipal bond it developed with Nuveen Asset Management.

The SPRDR Nuveen Barclays Capital Build America Bond ETF is the first new exchange traded fund built under a sub-advisory deal between State Street and Nuveen Asset Management. The bond is designed to provide exposure to Build America Bonds and track the performance of the Barclays Capital Build America Bond Index. The index has provided exposures to 85 issues as of 30 April 2010.

State Street is one of the world's largest providers of ETFs, a sector that also includes big-hitters such as BlackRock, which has the iShares brand; Deutsche Bank, and Societe Generale, owner of the Lyxor brand. ETFs track an increasingly wide variety of market segments and indices. BlackRock has recently warned that not all ETFs are "created equal" and that investors should scrutinize these products carefully.

While Build America Bonds are a relatively new asset class, a growing number investors and advisers who have become familiar with the product are already demanding diversified access, said Anthony Rochte, senior managing director at State Street.

"The first municipal bond ETF developed with Nuveen underscores our commitment to offering cutting edge products that provide investors with precise exposure to hard-to-reach corners of the market," said Rochte.

Build America Bonds were created in 2009 to appeal to a broader set of investors who want to look beyond traditional bonds and to reduce the borrowing costs of state and local governments. Between its launch in April last year up to 31 March 2010, 1,066 issues have been made.

Nuveen Investments is a global provider of investment services to institutions and high net worth investors.