Bonds

Understanding What are Bond Indices

In contrast to the wide variety of share indices, there are very few bond indices. The four most popular indices, which were developed by the Lehman Brothers investment bank are:

  • Lehman Brothers Government Bond Index- This index includes U.S government bonds with maturity dates that are more than one year in the future. It is designed for the government sector of the US bond market.

  • Lehman Brothers Credit Bond Index - This index includes corporate bonds with a rating of BBB or higher and is designed for the corporate sector of the US bond market.

  • Lehman Brothers Government/Credit Bond Index- This index combines the two preceding indices according to the following ratio:

  1. 55% government bonds.

  2. 45% corporate bonds.

This index is designed for the government and corporate sectors of the US bond market.

  • Lehman Brothers Aggregate Bond Index- This index includes government bonds, corporate bonds and mortgage-backed securities. It is designed for the general US bond market.

Understanding What are Bond Indices576Understanding What are Bond Indices