Qualifying debt securities must be issued by S&P 500 companies, be rated investment grade, be issued in the United States and denominated in U.S. dollars, have a remaining maturity of greater than or equal to one year, have a maturity upon issuance of at least two and a half years, and have a minimum par amount of $750 million.
The index also implements a liquidity screen. The 1000 most liquid bonds are included in the Index. If less than 1000 bonds meet the above criteria, all qualifying bonds will be included and will consist of fewer than 1000 bonds.
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The underlying index is then weighted by market value where bond issuances with higher market values are more heavily weighted than bond issuances with lower market values.
“The S&P 500/MarketAxess Investment Grade Corporate Bond Index is a new way to measure the U.S. investment grade corporate bond market,” Jason Giordano, Director, Fixed Income Product Management at S&P Dow Jones Indices, said in a note. “The companies represented in the index, constituents from the iconic S&P 500, are typically well capitalized and their bonds historically trade more frequently than the broader U.S. corporate bond landscape. We are pleased to license the index to ProShares.”
Bond ETF flows are accelerating rapidly, but still represent a small portion of the overall marketplace. Fixed-income ETFs are 17% of the $3.5 trillion in ETF assets, according to ProShares. By comparison, bond mutual funds represent 24% of the overall $17 trillion mutual fund marketplace.
For more information on new fund products, visit our new ETFs category.