ETF News

PIMCO launches GDP-weighted sovereign debt indexes

NEW YORK, July 13 (Reuters) - Pacific Investment Management Co. said it has launched two new sovereign bond indexes Tuesday to chart the performance of fixed-income securities in the United States, Europe and other industrialized and emerging economies.

Many stock and bond indexes are weighted by market capitalization. But in the new Pimco indexes, the key aspect on which the weightings of regions and their securities are based is by gross domestic product, Ramin Toloui, executive vice president and portfolio manager, said in a telephone interview from Pimco’s Newport Beach, Calif. headquarters.

Toloui, who helped develop the indexes, said these will help capture opportunities in the debt securities and instruments of governments and companies that are accounting for an increasing share of the world’s growth. Pimco is the world’s biggest bond investment manager and oversees over $1 trillion in assets.

The Pimco Global Advantage Government Bond Index, or Gladi Goverment, and the European Advantage Government Bond Index, differ from many indexes which are cap-weighted, where the portion of an index is allocated to each company or region depending on its bond price, multiplied by the number of outstanding debt issues.

“The explosion of public debt levels in industrialized countries is reshaping global bond markets,” Toloui said. “Improved approaches to indexing can help investors avoid the bias of traditional indexes toward high-debt issuers and embed more favorable performance characteristics in their fixed income benchmark.”

Reporting by Jennifer Ablan