GLOBAL - State Street Global Advisors has launched a new US high yield bond index strategy.
The strategy aims to deliver a more diversified and liquid exposure to the asset class, with a low tracking error, to the broad US high yield market. It replicates the returns and characteristics of the High Yield $200 million Very Liquid Index (HYVLI), a customised Lehman Brothers index.
The index comprises 300 of the most liquid and tradable BB and B rated issues in the 1,300 issue Lehman Brothers High Yield Index.
SSgA’s investment process also incorporates credit analysis in an effort to reduce default and distressed risk in the portfolio.
Bruce Walbridge, principal and portfolio manager for the US high yield bond index strategy said: “Given the skill we have demonstrated with our active high yield strategy, we have developed this new index strategy in response to growing client demand for an efficient way to gain broad exposure to high yield, while avoiding distressed securities and minimising transaction costs.”
SSgA’s strategy uses a stratified sampling technique to create a portfolio of approximately 120-130 liquid issues, matching the HYVLI in such characteristics as duration, issue market weight and credit quality.
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