(June 2012)
What are the largest Bond ETFs and which indexes do they track? Here is a summary table with more detailed overviews of each below:
Bond ETF Name Size (Assets Under Management) Index Name iShares Barclays TIPS Bond (TIP) $23.4 Billion Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L) iShares iBoxx $ Investment Grade Corporate Bond (LQD) $21.2 Billion iBoxx $ Liquid Investment Grade Index Vanguard Total Bond Market (BND) $17.1 Billion Barclays Capital U.S. Float Adjusted Bond Index iShares Barclays Aggregate Bond (AGG) $15.2 Billion Barclays Capital U.S. Aggregate Bond Index iShares iBoxx $ High Yield Coporate Bond (HYG) $14.1 Billion iBoxx $ Liquid High Yield Index Data From Index Universe 5/31/2012 The TIP ETF Tracks The Barclays Capital US Treasury Inflation Protected Securities Index
An interesting question arises with the TIP ETF. Why you would need an index to track one, very narrowly focused, type of security issued by the US Department of Treasury. The answer is that there is a tremendous amount of variation within the Treasury Inflation Protected Securities (TIPS) universe. TIPS vary by maturity date, value of principal, and fixed interest rate. You could have two TIPS with the same maturity date and fixed interest rate, but a different principal value (if they were issued on different dates).
The Barclays Capital US Treasury Inflation Protected Securities Index is weighted by market value and includes all TIPS issues with more than $250 million in bonds outstanding, and more than one year left to maturity. LQD Tracks The iBoxx $ Liquid Investment Grade Index This index is in fact very narrowly defined. Its goal is to include corporate bonds that are likely to be frequently traded and have a tight bid-ask spread. The index is weighted by the size of the bond issues, however no single issuer is allowed to represent more than 3% of the index. Bonds in this index must meet all the following …
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