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GDP-Weighted Bond Indexes Gain Traction (Corrected)
November 12, 2009 5:21 am
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[Editor's note: A previous version of this article stated that the GDP-weighted indexes were launched by Barclays Global Investors. In fact, they were launched by Barclays Capital. A corrected version runs below.] Barclays Capital has launched a new family of gross-domestic-product-weighted bond indexes, as investors look for better ways to benchmark the global fixed-income universe. Barclays isn’t the first to launch GDP-weighted bond indexes. Pimco debuted its own index in January of this year, and others (including the UN) have looked at this space. The advantages (or risks, depending on how you look at it) of a GDP-weighted index in the bond space are significant.For starters, market-cap-weighted bond indexes assign larger and larger weights to countries that borrow more and more money. This is counterintuitive, as increased debt may raise the likelihood of default. In addition, market-cap-weighted bond indexes typically underweight emerging markets, which have less developed bond markets. Barclays notes that 22 emerging market countries account for just 15 percent of global GDP, but form less than 0.7 percent of the Barclays Global Aggregate bond index by market value. GDP-weighted indexes partially correct these imbalances. Barclays’ new GDP-weighted index family includes the following flagship products:
In each variation, the methodology leads to a significant underweight in
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Short-Seller’s Guide To GLD
Gold, despite its recent rebound, has gotten clobbered over the past three months.Looking Beyond VWO And EEM
Broad-based, cap-weighted ETFs were the way to play emerging markets over the past decade. But it’s time for investors to become more strategic and look beyond VWO and EEM.-
May 21, 2012
iShares Plans LatAm Bond ETF New iShares ETF Takes aim at relatively untapped Latin American bond space. -
May 18, 2012
Best/Worst Weekly ETF Returns: GREK Off 18.6% GREK tumbled 18.57 percent in the week ended May 17, as the current structure of the eurozone teeters on the brink. -
May 09, 2012
Van Eck Adds Emerging Corporate Junk ETF Van Eck adds another yield-generating ETF, this one focused on emerging market corporate junk bonds. -
April 19, 2012
iShares Debuts Emerging Corporate ETF iShares takes on WisdomTree in providing exposure to corporate debt in fast-growing emerging market countries. -
March 08, 2012
WisdomTree Emerging Corporates ETF A First WisdomTree’s emerging markets corporate bond ETF beats the competition to the starting line.
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JP Morgan & ETN Credit Risk
Paul & Ugo discuss the implications of J.P. Morgan's $2 billion loss, the European debt crisis and what it means for ETN investors.
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