Lehman Aggregate Bond Index
Encyclopedia
The Barclays Capital Aggregate Bond Index, which used to be called the "Lehman Aggregate Bond Index," is a broad base index, maintained by Barclays Capital, which took over the index business of the now defunct Lehman Brothers
, and is often used to represent investment grade bonds being traded in United States. Index fund
s and exchange-traded fund
s are available that track this bond index.
-weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented. Municipal bond
s, and Treasury Inflation-Protected Securities are excluded, due to tax treatment issues. The index includes Treasury securities
, Government agency bonds, Mortgage-backed bonds
, Corporate bond
s, and a small amount of foreign bonds traded in U.S.
The Barclays Capital Aggregate Bond Index is an intermediate term index. The average maturity as of December 31, 2009 was 4.57 years.
Barclays Capital Aggregate Bond Index (AGG), Thrift Savings Plan
Fixed Income Index fund, Vanguard
Total Bond Market Index Fund (VBMFX), and Fidelity
U.S. Bond Index Fund (FBIDX). Fund managers sometimes subdivide the different parts of the Aggregate by maturity or sector for managing individual portfolios. The Municipal section of the index is the only part of the index that cannot be used for this purpose - because municipal debt is issued by so many different entities, the Municipals in the Aggregate are only intended to be representative, and Lehman maintains separate indices for maintaining Municipal-only portfolios.
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
, and is often used to represent investment grade bonds being traded in United States. Index fund
Index fund
An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions.-Tracking:Tracking can be achieved by trying to hold all of the...
s and exchange-traded fund
Exchange-traded fund
An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE...
s are available that track this bond index.
Index characteristics
The Barclays Capital Aggregate Bond Index is a market capitalizationMarket capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
-weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented. Municipal bond
Municipal bond
A municipal bond is a bond issued by a city or other local government, or their agencies. Potential issuers of municipal bonds includes cities, counties, redevelopment agencies, special-purpose districts, school districts, public utility districts, publicly owned airports and seaports, and any...
s, and Treasury Inflation-Protected Securities are excluded, due to tax treatment issues. The index includes Treasury securities
Treasury security
A United States Treasury security is government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States federal government, and they are often referred to simply as Treasuries...
, Government agency bonds, Mortgage-backed bonds
Mortgage-backed security
A mortgage-backed security is an asset-backed security that represents a claim on the cash flows from mortgage loans through a process known as securitization.-Securitization:...
, Corporate bond
Corporate bond
A corporate bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money in order to expand its business. The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date...
s, and a small amount of foreign bonds traded in U.S.
The Barclays Capital Aggregate Bond Index is an intermediate term index. The average maturity as of December 31, 2009 was 4.57 years.
Investing
Many index funds and exchange-traded funds attempt to replicate (before fees and expenses) the performance of the Barclays Capital Aggregate Bond Index. Some examples of such funds include iSharesIShares
iShares are a family of exchange-traded funds managed by BlackRock. The first iShares were known as WEBS but were since rebranded.Each iShares fund tracks a bond or stock market index...
Barclays Capital Aggregate Bond Index (AGG), Thrift Savings Plan
Thrift Savings Plan
The Thrift Savings Plan is a defined contribution plan for United States civil service employees and retirees as well as for members of the uniformed services....
Fixed Income Index fund, Vanguard
The Vanguard Group
The Vanguard Group is an American investment management company based in Malvern, Pennsylvania, that manages approximately $1.6 trillion in assets. It offers mutual funds and other financial products and services to individual and institutional investors in the United States and abroad. Founder...
Total Bond Market Index Fund (VBMFX), and Fidelity
Fidelity Investments
FMR LLC or Fidelity Investments is an American multinational financial services corporation one of the largest mutual fund and financial services groups in the world. It was founded in 1946 and serves North American investors. Fidelity Ventures is its venture capital arm...
U.S. Bond Index Fund (FBIDX). Fund managers sometimes subdivide the different parts of the Aggregate by maturity or sector for managing individual portfolios. The Municipal section of the index is the only part of the index that cannot be used for this purpose - because municipal debt is issued by so many different entities, the Municipals in the Aggregate are only intended to be representative, and Lehman maintains separate indices for maintaining Municipal-only portfolios.