The indices in the S&P 500 Bond Mega 30 Index Series are designed to measure 30 of the largest bonds from the S&P 500 Investment Grade Corporate Bond Index and the S&P 500 High Yield Corporate Bond Index. The index series is designed to be a more liquid and investable subset of the S&P 500 Bond Index.
- What is the S&P 500 Bond Mega 30 Index Series?
The S&P 500 has been the flagship index tracking the U.S. equity market for over 50 years. Over the past few years, corporations have issued large amounts of debt, likely taking advantage of the lower interest rate environment. The S&P 500 Bond Index Series seeks to track debt issued by companies in the S&P 500.
The S&P 500 Bond Mega 30 Investment Grade Index is composed of 30 bonds,representing the largest investment-grade bond issues of the S&P 500. The bonds are selected from the S&P 500 Investment Grade Corporate Bond Index.
The S&P 500 Bond Mega 30 High Yield Index is composed of 30 bonds, representing the largest high-yield bond issues from the S&P 500. The bonds are selected from the S&P 500 High Yield Corporate Bond Index.
In addition, there are two maturity-based indices that track the 30 largest bond issues in the three- to five-year and five- to seven-year maturity ranges for both investmentgrade and high-yield issuers, as well as a one- to three-year maturity-based index for the investment-grade series.
- What are some of the key benefits of the S&P 500 Bond Mega 30 Index Series?
Over the past few years, the growing debt pool issued by corporations has driven the need for independent indices to track different aspects of that market. The new S&P 500 Mega Bond Indices track bonds with larger issue sizes that typically trade with greater frequency and enhanced transparency, and therefore tend to have higher liquidity.
- Liquidity: To help ensure liquidity, the largest bond by par amount outstanding is used for each issuer.
- Composition: Comprises bonds from the widely followed, large-cap companies tracked in the S&P 500 with one bond per issuer represented.
- High Quality: As of July 31, 2018, the weighted average rating for the S&P 500 Bond Mega 30 Investment Grade Index was A-/A3/A, and for the S&P 500 Bond Mega 30 High Yield Index the weighted average rating is BB/Ba2/BB+ by S&P Global Ratings/Moody’s/Fitch, respectively.
- Small Constituent Number: Each index comprises 30 bonds for manageability.
- Weighting: Each index is equal weighted to avoid overexposure to any one issuer.
- Performance: The indices closely replicate performance of their significantly broader parents S&P 500 Investment Grade Corporate Bond Index and the S&P 500 High Yield Corporate Bond Index.
- Transparency: The index aims to make opaque bond markets more transparent by focusing on issuers that are already familiar to market participants. Results are published on spdji.com.
