Index provider Solactive has launched the Solactive Australian Investment Grade Corporate Bond Select TR Index used as the basis for yesterday’s news of the BetaShares Australian Investment Grade Corporate Bond ETF (“CRED”).
The index seeks to replicate the performance of a portfolio of investment grade, senior corporate bonds denominated in Australian dollars (AUD).
Solactive writes that the index methodology will favour securities offering superior expected excess returns over Australian government bonds. By selecting bonds based upon expected returns rather than debt outstanding, the index methodology seeks to avoid shortcomings of traditional debt-weighted indices and provide relatively higher returns.
Timo Pfeiffer, Head of Research at Solactive, says: “The Solactive Australian Investment Grade Corporate Bond Select TR Index is an addition to our range of smart beta indices in the fixed-income space. We are very happy to partner up with BetaShares, one of the leading players in the Australian ETF market, and increase the portfolio of investment strategies targeting Australian investors.”
Solactive has previously teamed up with BetaShares on the launch of the Solactive Australia 200 Index underlying BetaShares Australia 200 ETF. The Solactive Australian Investment Grade Corporate Bond Select TR Index is the latest fixed-income index developed together with BetaShares, following the Solactive Australian Bank Senior Floating Rate Bond Index and the Solactive Australian Hybrid Securities Index.
The Solactive Australian Investment Grade Corporate Bond Select TR Index is calculated as a total return index. Each security is assigned an equal weight, with a maximum weight per issuer of 7 per cent.