London, U.K.-based FTSE Russell has announced the launch of a new 0+ universe bond index to address growing interest in the fixed income market.
As interest rates rise, Canadian fixed-income investors are becoming more interested in tracking the entire curve, including the short — zero to one year — segment of the market. “Typically, the longer end of the yield curve is more sensitive to changes in the interest rate,” FTSE Russell says in a news release.
“It’s not surprising that in our current rising rates environment, the shorter duration bond universe is drawing more interest from investors,” says Waqas Samad, CEO of global benchmarks for FTSE Russell, in a statement.
“We find our clients looking for tools to measure the very short segment (zero to one year) of the Canadian bond market, which our new index series aptly provides,” he adds.
The 0+ universe bond index series extends coverage of securities through maturity and provides Canadian investors with the tools to measure a segment of the Canadian bond market not previously tracked.
“The Canadian universe bond index duration has been steadily lengthening over the last few decades, increasing by over two years, from 5.3 in 2000 to 7.4 as of the end of March 2018,” says Marina Mets, managing director of fixed income at FTSE Russell, in a statement.
“Introducing the zero to one year coverage for bonds rolling down the from the flagship index, brings the duration of the 0+ universe bond index down to 6.8, while providing a very comparable return and yield.”