A Quick Overview of the Bloomberg Aggregate Bond Index
An index used to track the performance of the U.S. bond market
The Bloomberg Aggregate Bond Index, or the “Agg,” is a broad-based, market capitalization-weighted bond market index representing intermediate-term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the U.S. bond market.
The Agg was created in 1986 by Bloomberg LP and is calculated by Barclays. The index includes a wide variety of bonds, including government bonds, corporate bonds, mortgage-backed securities, and asset-backed securities. The bonds in the index are classified by maturity, credit quality, and type of issuer.
The Agg is a market capitalization-weighted index, which means that the weight of each bond in the index is determined by its market capitalization. This means that the largest bonds in the index have the greatest impact on its performance. The index is a widely followed index and is used by a variety of investment vehicles, including mutual funds, exchange-traded funds (ETFs), and hedge funds.
The Agg has experienced a significant amount of volatility over the past few decades. The index has experienced several periods of significant decline, including the 1987 stock market crash, the 2000 dot-com bubble, and the 2008 financial crisis. However, the index has also experienced periods of significant growth, including the 1990s bull market and the 2010s recovery.
The Agg is used by a variety of investors for a variety of purposes. Mutual funds and ETFs that track the index are a popular way for investors to gain exposure to the U.S. bond market. Hedge funds also use the index as a benchmark to measure their performance.
If you are interested in investing in bonds, the Agg is a good place to start. The index can help you to track the performance of the U.S. bond market and to choose the right bonds for your investment portfolio.