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ETF Specialist

A More Inclusive U.S. Aggregate Bond Index

A look at the Barclays U.S. Aggregate Bond Index's parent: Barclays U.S. Universal Bond Index.

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Back when the Barclays U.S. Aggregate Bond Index (formerly the Lehman Aggregate Bond Index) launched in 1976, it was the first of its kind. It provided aggregate exposure to the U.S. bond market and gave bond managers an index by which to benchmark their performance. While it has become the most benchmarked and referenced bond index in the world, its name began to mean less "aggregate bond" and more "aggregate investment-grade bond" as time passed.

Part of that evolution stemmed from the emergence or expansion of newer opportunity sets within the fixed-income market. For example, the 1980s and 1990s witnessed the growth of the high-yield bond market. The 2000s saw innovation and growth in the asset-backed and nonagency mortgage-backed securities markets. As the fixed-income industry grew and market dynamics changed, the Barclays U.S. Aggregate Bond Index began to cover less and less of the U.S. fixed-income market, instead choosing to follow the same rules it had in place when it first launched. Today, the index excludes more than 16% of the investable, taxable, fixed-rate U.S. bond market.

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Thomas Boccellari does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.