Frankfurt-based index provider Solactive has unveiled the Solactive USD Investment Grade Corporate Index, tracking the performance of US dollar-denominated investment grade corporate bonds. The index is being offered for licensing to underlie future investment products such as ETFs.
Steffen Scheuble, CEO of Solactive
The index is composed of 5,000 corporate debt issues denominated in US dollars from both developed and developing markets with an amount outstanding of at least $400 million and a remaining time to maturity of at least 18 months. All components must have a rating that is investment grade. The index is weighted by market value, calculated as a total return index and is rebalanced monthly.
Using back-tested data the index is up 20.9% over the past five years.
The launch is the latest development in Solactive’s strategic goal of switching its indexing focus away from niche, targeted exposures to include more broad market indices within its fixed income suite. At the beginning of 2016, Solactive launched the Solactive Euro IG Corporate Index, capturing the performance of investment grade corporate bonds issued in euros. This was followed by the introduction in 2017 of the Solactive Euro HY Corporate Index and the Solactive USD High Yield Corporate Index, each providing a snapshot of non-investment grade bond markets denominated in euros and US dollars respectively. (See: “Solactive unveils new USD and EUR high yield bond indices”)
Steffen Scheuble, CEO Solactive AG, commented: “In the last two years we have dedicated a lot of effort to expand our family of branded benchmarks both on the equity and fixed-income side following increased customer demand. With the Solactive USD Investment Grade Corporate Index, together with the Solactive USD High Yield Corporate Index, we are finally completing coverage of the US dollar-denominated corporate bond market.”
In addition to forming the basis for future product development, investors can use this series of Solactive bond indices to evaluate the performance of segments of the fixed-income market, or as the starting universe on which to build smart beta and more niche strategies.