The S&P/CLX IPSA is a renowned benchmark for Chilean equities, including nearly 90% of Chile’s equity market, and serves as the parent index for a wide-range of S&P/ CLX Indices. Explore how S&P Dow Jones Indices and Bolsa de Santiago’s partnership is providing a diverse set of tools for investors looking to access Chile’s evolving markets.
1. What’s included in the S&P/CLX Fixed Income Indices that seek to track bonds in the Chilean market?
Jaime: The S&P/CLX Fixed Income Indices have two large series of sovereign indices, nominal rate, and real rate indices, known as the S&P Inflation-Linked Indices. As you can see in Exhibit 1, these indices are divided into long maturities and short maturities. The detailed maturity "buckets" or partitions, are 0-1, 1-3, 3-5, 5-7, 7-10, and 10+ years, while the grouped maturity “buckets” are 0-1, 1-5, 5-10, and 10+ years. Both sets of indices and the benchmark indices, which cover the entire nominal and real curve, are calculated in U.S. dollars.
2. Why were the indices split in this fashion, and why are they issued in a non-local currency?
Jaime: First, it is important to have indices in different currencies (in this case U.S. dollars), so that they can be used locally and by international investors. The indices are split by maturities because the curve does not move the same way in the short term as it does in the long term, so there are detailed references that can be used as benchmarks for those asset managers who have short-, medium-, or long-term bond strategies.
We wanted to develop a set of tools that could provide data to inform investors across geographies and that could be applied across a range of strategies. The indices can also serve as the basis for investment products, such as ETFs or index funds, because they are easy to replicate. This would lead to a more transparent and liquid way to tailor allocations to meet investment goals.