The International Securities Exchange (ISE), a US-based options exchange and index provider, and SecuredGrowth Quantitative Research (SGQR), a financial research company, have announced plans to develop a series of indices that combine the performance of popular exchange-traded funds (ETFs) with a proprietary, so-called ‘SecuredGrowth’, process to enhance the return.
ISE ETF Ventures, the index and ETF business of the ISE, has partnered with SGQR to develop a series of enhanced ETF-based indices.
The SGQR SPY SecuredGrowth Index, the first index established through the partnership, adds a systematic yield from a unique methodology that includes a portfolio of investment-grade domestic corporate bonds and US government-issued Treasury and Agency notes overlaid upon the SPDR S&P 500 ETF (SPY).
Kris Monaco, Head of ISE ETF Ventures, ISE’s index and ETF business, said: “As ISE ETF Ventures continues to grow, our partnership with SecuredGrowth is a prime example of taking part in bringing unique indexes to market. Their fixed income overlay concept can now be packaged into a single index with the world’s most popular ETFs, allowing investors an innovative enhancement to their existing strategies.”
Matthew Sutherland, SGQR’s founder and CEO, added: “The SecuredGrowth process was designed to improve the returns of an investment in any asset class across multi-year market cycles without increasing volatility. We are delighted to be partnering with ISE in our effort to introduce SGQR’s pioneering SecuredGrowth solution to the market place.”
The enhancement process works by capitalising on a positive spread between a held-to-maturity bond portfolio and the cost to finance 100% participation in the price movement of a selected ETF, in this case the SPDR S&P 500 ETF. The spread is assured by insurance providers that guarantee a percentage of the principal and interest payments on the held-to -maturity bond portfolio.
Interactive Data has been appointed to calculate intra-day values for this new series of indices.
Erin Heise, Senior Director for Interactive Data, said: “We are pleased to serve as the calculation agent for these new indices. Our expertise in performing index calculations, along with our delivery of independent evaluated pricing for fixed income securities, enables us to deliver critical intra-day information on indices spanning a wide range of asset classes.”