Standard & Poor's has expanded its family of municipal bond indexes with the launch of the S&P Municipal Yield Index.
S&P Indices also announced that it has licensed State Street Global Advisors (SSgA) to list and trade an Exchange Traded Fund based on the S&P Municipal Yield Index.
According to a press release, the S&P Municipal Yield Index is a market value-weighted index that seeks to provide a measure of an investing strategy used in the municipal market that allocates a different percentage to bonds rated below investment grade and non-rated bonds than to bonds rated investment grade.
The S&P Municipal Yield Index, whose constituents are derived from Standard & Poor's/Investortools Municipal Bond Index, incorporates a strategy of proportional investing in municipal bonds that typically have higher yields than other municipal bonds. To do so, 70% of the market value of the Index is allocated to high yield bonds, 20% to BBB rated bonds and 10% to A rated bonds. Both tax-exempt bonds and bonds subject to the Alternative Minimum Tax (AMT) are included in the Index.