ProShares has launched the ProShares S&P 500 Bond ETF (SPXB US) on NYSE Arca, providing exposure to investment-grade corporate bonds issued by members of the blue-chip S&P 500 equity index.
Michael Sapir, chairman and CEO of ProShare Advisors.
The fund tracks the S&P 500/MarketAxess Investment Grade Corporate Bond Index.
Michael Sapir, co-founder and CEO of ProShare Advisors, the advisor to ProShares, commented, “The S&P 500 served as the basis for the first ETF over 25 years ago. Today’s launch of a bond ETF tied to the S&P 500 is another important moment in the evolution of ETFs.
“We believe SPXB will be an attractive option to investors considering bond ETFs. SPXB offers the most liquid, high-quality bonds issued by companies in the S&P 500, the widely known and most-used securities benchmark.”
SPXB has an expense ratio of 0.15%, pricing it on par with the giant iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD US), which has over $32 billion in assets under management.
To be eligible for inclusion in the underlying index, bonds must have a minimum par amount of $750 million, a maturity upon issuance of at least 2.5 years, and a remaining maturity greater than one year.
Eligible bonds are ranked based on their liquidity. No more than 1,000 of the most liquid bonds are included in the index which is weighted by market cap. The index is rebalanced monthly.
When paired with the conventional S&P 500 index, the bond index provides powerful insight into the performance and financial conditions of leading US companies.
“The S&P 500/MarketAxess Investment Grade Corporate Bond Index is a new way to measure the US investment grade corporate bond market,” said Jason Giordano, director, fixed income product management at S&P Dow Jones Indices.
“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 US corporate bond landscape. We are pleased to license the index to ProShares.”
The index currently has 206 issuers with a weighted average maturity of 11.5 years and an effective duration of 7.7 years.
Almost three-quarters of the total exposure is found in just three sectors: finance – banks account for 27.5%, followed by industrial manufacturing (23.7%) and industrial service (21.8%).
The majority of the exposure is also found nearer the lower end of the investment grade spectrum with bonds rated BBB+ accounting for 27.6%, followed by those rated A- (17.8%), BBB (16.0%) and A (12.1%). The fund offers a yield to maturity of 3.7%.
Distributions from the fund are sent to investors on a monthly schedule.