ProShares has launched the first S&P 500 bond index ETF.
The S&P 500/MarketAxess Investment Grade Corporate Bond Index (SPXB) ETF is essentially a cheaper iteration of Ivy ProShares S&P 500 Bond Index Fund, whose expense ratio ranges from 34 to 65 basis points depending on the share class.
SPXB charges just 15 basis points, but that’s three times the expense ratio of the iShares Core U.S. Aggregate Bond ETF (AGG), a long-term investment-grade bond ETF that holds more than 6,700 bonds.
The ProShares S&P 500 bond ETF, also a long-term bond fund, can invest in up to 1,000 of the most liquid, high-quality U.S. investment-grade corporate bonds with maturities of 2-1/2 years or higher at issuance or a face value of at least $750 million.
Issues that meet the criteria are ranked by liquidity, as measured by their 60-day trading average volume reported by TRACE (Trade Reporting and Compliance Engine) data so that the most frequently traded, high-quality bonds can be chosen.
Jason Giordano, director, Fixed Income Product Management at S&P Dow Jones Indices tells ThinkAdvisor that he expects all new issues will probably make the cut.