Following the successful launch of various benchmark indices, Solactive is releasing the Solactive Canadian Bond Universe TR Index, a new broad-based index targeting the Canadian investment-grade (IG) bond market. Specifically, the index tracks the performance of CAD- denominated IG government and corporate bonds issued in Canada.
This index is the latest addition to the portfolio of benchmarks offered by Solactive which aim at providing investors with a wide selection of cost-efficient broad-market strategies. The Canadian benchmark can be used to evaluate the performance of portfolios or can serve as a starting universe for smart beta indices and active strategies. Alternatively, it can constitute the basis for index-linked financial products such as ETFs and structured products.
The Solactive Canadian Bond Universe TR Index is part of a broader family of Canadian indices offered by Solactive catering to investors interested in gaining Canada-specific exposure on both the fixed-income and hybrid sides. The family comprises various sub-indices to the broader Solactive Canadian Bond Universe TR Index and a Canadian preferred shares index.
More precisely, the Solactive Short-Term Canadian Bond Universe TR Index represents a subset of the broader Solactive Canadian Bond Universe TR Index and covers investment grade bonds with shorter maturities ranging from 1 to 5 years. The Solactive 1-5 Year Laddered Canadian Government Bond TR Index and the Solactive 1-5 Year Laddered Canadian Corporate Bond TR Index offer separate exposure to either the government or corporate segment following a ladder strategy. Finally, the Solactive Canadian Rate Reset Preferred Share Index, seeks to mirror the performance of reset rate preferred shares listed on the TSX with specific market- cap, liquidity and quality features.
Henning Kahre, Head of Research, Solactive AG, commented: “The new family of Canada- focused indices offers investors the possibility of gaining exposure to specific sections of the Canadian market. Considering that Canada is one of our most important target markets, broadening our range of indices is a strategic step for Solactive, as it helps strengthen our footprint in Canada.”
The fixed-income indices are all calculated as total return indices and are published in CAD. To be selected as index components, bonds must be either government or corporate bonds denominated in CAD, rated investment grade, and issued in the Canadian market with a minimum effective time to maturity 12 months. For the Solactive Canadian Bond Universe TR Index and the Solactive Short-Term Canadian Bond Universe TR Index, the minimum amount outstanding must be 100 million CAD, while for the two laddered indices, the minimum amount outstanding must be 300 million CAD. Components of the two broad indices are weighted according to their market value, while for the laddered indices bonds are assigned to five different maturity buckets which are equally weighted at the launch.
The Solactive Canadian Rate Reset Preferred Share Index is a total return index published in CAD. Index components are preferred shares listed in the TSX with a minimum market-cap of 100 million CAD. The index is weighted according to market cap with a 10% weight cap per issuer.