IN THIS LIST

Introducing the iBoxx USD Liquid Investment Grade BBB 0+ Index

Defensive Strategies for the Asian USD High Yield Credit Market

From Countryside to Capital Markets: The S&P/ASX Agribusiness Index

Global Sector Primer Series: Financials

InsuranceTalks: An Enhanced Approach to Managing Risk

Education - Jun 30, 2022

Introducing the iBoxx USD Liquid Investment Grade BBB 0+ Index

Nicholas Godec

Senior Director, Head of Fixed Income Tradables & Commodities

S&P Dow Jones Indices

Executive Summary

The iBoxx USD Liquid Investment Grade BBB 0+ Index seeks to track the BBB segment of the investment-grade (IG) universe. As the IG universe has evolved in the past few years, the launch of this index comes at an opportune time for the following reasons:

The BBB rated segment of the USD IG corporate bond market is the largest segment of the IG credit markets, at 50% of the notional outstanding. It has become increasingly important for IG debt investors looking for incremental yield and risk exposure;
Further, BBB rated debt has outperformed the broader IG market on a risk-adjusted return basis;
BBB rated debt can offer a pickup in yield; and
Incorporating a basis of investment that targets the investable BBB rated segment of the USD IG bond market could help refine exposure and grant greater flexibility in positioning.

Download Full Article

Education - Jun 30, 2022

Defensive Strategies for the Asian USD High Yield Credit Market

Kangwei Yang

Director, Fixed Income Product Management

S&P Dow Jones Indices

Market Overview (2021-Present)

International investors have long viewed the Asian USD high yield credit bond market as an alternative investment universe to the traditional U.S. high yield market. As a result, the junk bond market has undergone considerable growth, with the total issuance increasing almost sixfold between 2012 and 2020.

However, the market has seen some turbulence in the past 12 to 18 months, largely due to its high exposure to the Chinese real estate market. In the past decade, Chinese real estate companies have issued large amounts of debt at a low borrowing cost to fund their operations. This changed when Chinese regulators imposed new rules to deleverage the financial system. Meanwhile, companies were unable to turn over their inventory effectively for cash, and a liquidity crisis in the sector began to emerge.

In September 2021, China Evergrande Group, the second-largest property developer in China by sales, missed coupon payments on its U.S. debt obligation. Since then, there has been a growing list of prominent names involved in the Chinese real estate sector crisis. The top five issuers by market value as of April 2021 in the iBoxx USD Asia ex-Japan China High Yield Real Estate2 have defaulted on their USD debt obligations in the past 12 months.

As of May 31, 2022, more than 12 distinct Chinese property issuers in the iBoxx USD Asia ex-Japan Corporates High Yield had missed payments on their U.S. debt, and the total amount of issuance removed from the index exceeded USD 35 billion.

Download Full Article

Education - May 31, 2022

From Countryside to Capital Markets: The S&P/ASX Agribusiness Index

Izzy Wang

Associate Director, Factors and Dividends

S&P Dow Jones Indices

Jason Ye

Senior Director, Factors and Dividends

S&P Dow Jones Indices

Introduction

Agriculture is the foundation of our society. It provides food to support human’s daily nutrition needs and is the main source of raw materials such as cotton, wood and leather that are critical to major industries in the economy. The United Nations (UN) has set “end hunger, achieve food security and improved nutrition and promote sustainable agriculture” as a global policy in its Sustainable Development Goals. By 2050, the global population is estimated to grow to 9.6 billion, demanding at least a 70% increase in food supply. While the growing population is driving demand for agricultural products, climate change, geopolitical risk and water scarcity are threatening the global food supply chain. Most recently, the Russia-Ukraine conflict has cast immediate damage to global food supply, causing a food price increase in 2022. Since 2020, the World Bank Agriculture Price Index has increased by 52% (see Exhibit 1).

From Countryside to Capital Markets: The S&P/ASX Agribusiness Index: Exhibit 1

Australia is a major producer of many agricultural products, including wheat, wool and beef. Its agribusiness is a vital contributor to the domestic economy, and Australia itself is a key export country in the global market. The diversified climate and soil conditions in Australia can sustain a wide range of agricultural businesses including livestock, crops, fruit and vegetables, fisheries, and forest (see Exhibit 2). More than half of the land and about one-quarter of the water in Australia are used in the agriculture industry. Of the agricultural production, 70% is exported to other countries, accounting for 12% of Australia’s export earnings in 2020-2021. In 2020, Australia’s sheep meat export ranked first, and its beef export ranked second in the world.

Download Full Article

Education - May 27, 2022

Global Sector Primer Series: Financials

Hector Huitzil Granados

Senior Analyst, Global Equity Indices

S&P Dow Jones Indices

Introduction

The Global Industry Classification Standard^® (GICS^®) assigns companies to a single classification at the sub-industry level according to their principal business activity using quantitative and qualitative factors, including revenues, earnings and market perception. The sector is the first level of the four-tiered, hierarchical industry classification system that includes 11 sectors, 24 industry groups, 69 industries and 158 sub-industries. The classification standard is in constant evolution to ensure that it reflects the current state of industries globally.

The Financials sector includes, but is not limited to:

Companies with conventional banking operations;
Insurance and reinsurance brokerage firms;
Financial exchanges and providers of financial decision support tools and products, including rating agencies;
Institutions that provide consumer finance services;
Investment management and brokerage firms;
Firms providing mortgage and mortgage-related services; and
Companies with significantly diversified holdings across three or more sectors, none of which contribute a majority of profit or sales.

Download Full Article

Education - May 17, 2022

InsuranceTalks: An Enhanced Approach to Managing Risk

Phillip Brzenk

Managing Director, Global Head of Multi-Asset Indices

S&P Dow Jones Indices

Insurance Talks is an interview series where insurance industry thinkers share their thoughts and perspectives on a variety of market trends and themes impacting indexing.

Phillip Brzenk is Head of Multi-Asset Indices at S&P Dow Jones Indices (S&P DJI). His team is responsible for the product management of multi-asset and option indices, which cover a variety of outcome-oriented index solutions including managed volatility, retirement, dynamic allocation, inflation hedging, sustainability, and absolute return.

S&P DJI: Following the 2008 Global Financial Crisis (GFC), many investors with longer-term time horizons and liabilities found themselves more averse to volatility. How did this give rise to the S&P Risk Control Indices?

Phil: The GFC brought significant disruption to the markets, with U.S. equities (as measured by the total return of the S&P 500^®) dropping over 55% from Oct. 9, 2007, to March 9, 2009. In addition, correlations between asset classes increased, reducing potential diversification benefits normally associated with standard allocation strategies. Coming out of the crisis, there was a clear need to develop a systematic asset allocation framework that could react quickly to changing market conditions, with a particular focus on controlling volatility—and with that, S&P DJI was a pioneer in the market when we launched the first S&P Risk Control Indices in 2009.

S&P DJI: Some practitioners might ask, why manage risk when it can be avoided?

Phil: The S&P Risk Control Indices attempt to give asset class exposure to equities and cash (Risk Control 1 [RC]) or equities and Treasury bonds (Risk Control 2 [RC2]) for potential long-term return premium over short-term cash. The index series incorporates a reactionary asset allocation framework that shifts between the asset classes in order to target a specific volatility target percentage. While volatility is not precisely equivalent to risk, having a volatility target enables participants to match their appetite for risk taking. The asset allocation framework and volatility target in S&P DJI’s risk control indices have historically enabled them to achieve reduced tail risk and higher risk-adjusted returns compared to standard equity exposure.

Download Full Article

S&P Global Offerings

Market Intelligence

Ratings

Energy

S&P Dow Jones Indices

Mobility

Featured Topics

Featured Products

S&P Capital IQ Pro

S&P Global Energy Core

S&P Global ESG Scores

AutoCreditInsight

Ratings360

SPICE: The Index Source for ESG Data

Events

Careers

Our Services

Our Services

Data & Index Licensing

Data Delivery Platforms

Private Investment Benchmarks

Investment Themes

U.S. Core

Fixed Income

Factors

Thematics

Professional Resources

Wealth Managers

Insurance

Institutional Investor

Defined Contribution

Equity

Fixed Income

Commodities

Multi-Asset

Private Markets

Sustainability

Dividends & Factors

Thematics

Digital Assets

Indicators

Other Strategies

By Region

Our Exchange Relationships

North America

Latin America

EMEA

Asia Pacific

Research & Insights

Research

Education

Performance Reports

SPIVA

Investment Themes

Blog

Events & Webinars

Index TV

Education

Education

Our Education Partnerships

Index Literacy: An Investor's Guide to Indices

VIX: A Primer on the Volatility Gauge

Performance Reports

View All

Index Dashboards

Quarterly Reports

Global Daily Index Dashboard

SPIVA®

SPIVA Data

About SPIVA

SPIVA Library

Investment Themes

Events & Webinars

In-Person Events

Webinars

Webinars on Demand

Governance

Regulatory Information

Methodologies

Consultations