Alternative Approaches to Fixed Income Indexing

 Alternative Approaches to Fixed Income Indexing

With the 2008–2009 global financial crisis still a fresh memory and sovereign-debt woes playing out almost daily in Europe, fixed income investors are seeking alternatives to traditional market-cap-weighted indexing. The authors of a new Vanguard research paper examine several alternative index-weighting methodologies commonly proposed in the global sovereign and U.S. corporate marketplaces. They show that such methods are not a better way to measure market performance, but merely a reweighting of risk within that market.