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Nasdaq OMX Group has launched eight new indices in the Nasdaq BulletShares Index Family.
The new Nasdaq BulletShares Ladder Indexes are traditional bond ladders implemented through indices utilising defined-maturity bond ETFs.
A bond ladder is a strategy for managing fixed income investments, such as Treasuries, corporate bonds and high-yield debt. To implement a ladder strategy, a portfolio is divided evenly among bonds that mature at regular intervals, for example, once a year.
There are a number of benefits of purchasing several smaller bonds with different maturity dates rather than one large bond with a single maturity date. These benefits can include lower interest rate and reinvestment risk, added diversification, higher average yields and increased liquidity.
The new Nasdaq BulletShares Ladder Indexes apply this strategy via an equally weighted portfolio of Guggenheim BulletShares ETFs to track defined-maturity targets of 0-3 years and 0-5 years of the investment-grade and high-yield corporate bond markets.
Each index is rebalanced annually in December to reinvest the proceeds of maturing Guggenheim BulletShares ETFs in the next eligible Guggenheim BulletShares ETF, so that the index has an equal weighting across portfolio constituents.
The underlying Guggenheim BulletShares ETFs, which are themselves linked to Nasdaq BulletShares indices, represent the performance of an investment in a diversified, held-to-maturity portfolio of fixed income securities with a common year of maturity.
John Jacobs, Executive Vice President, Nasdaq OMX Global Indexes, said: “These new indexes will provide the financial community a benchmark for tracking one of the most common types of fixed-income investing, bond-laddering.”
The new indices are as follows:
Nasdaq BulletShares Corporate Debt 0-3 Ladder Index
Nasdaq BulletShares Corporate Debt 0-3 Ladder Total Return Index
Nasdaq BulletShares Corporate Debt 0-5 Ladder Index
Nasdaq BulletShares Corporate Debt 0-5 Ladder Total Return Index
Nasdaq BulletShares High Yield Debt 0-3 Ladder Index
Nasdaq BulletShares High Yield Debt 0-3 Ladder Total Return Index
Nasdaq BulletShares High Yield Debt 0-5 Ladder Index
Nasdaq BulletShares High Yield Debt 0-5 Ladder Total Return Index
The index family is co-branded by Nasdaq OMX and Accretive Asset Management. Accretive developed the BulletShares methodology in 2009 with the objective of combining the benefits of individual bonds and bond funds.
“The Nasdaq BulletShares Ladder Indexes are the next step for Nasdaq and Accretive Asset Management in creating new ways to measure fixed income investing,” added Jacobs.
With the launch of these latest benchmarks, the Nasdaq BulletShares Index Family now consists of 28 indices covering the investment-grade and high-yield corporate debt markets.