What is Lehman Brothers Government/Corporate Bond Index
Lehman Brothers Government/Corporate Bond Index is an unmanaged market-weighted benchmark index. Like other benchmark indexes, it provides investors with a standard against which they can evaluate the performance of a fund or security.
As the name implies, this index includes both government and corporate bonds. The index consists of investment grade corporate debt instruments with issues higher than $100 million and maturities of one year or more. The Lehman Brothers Government/Corporate Bond Index is a total return benchmark index for many bond funds.
BREAKING DOWN Lehman Brothers Government/Corporate Bond Index
Lehman Brothers Government/Corporate Bond Index is a subset of what was initially called the Lehman Brothers Aggregate Bond Index, which is currently known as the Bloomberg Barclays US Aggregate Bond Index. The other subgroups of that index are the Mortgage-Backed Securities Index and Asset-Backed Securities Index. Lehman Brothers filed for bankruptcy in 2008. The Lehman Brothers Aggregate Bond Index was then managed by Barclays until Bloomberg acquired Barclays Risk Analytics and Index Solutions Ltd. (“BRAIS”) from Barclays in 2016. The benchmark indexes will be co-branded “Bloomberg Barclays Indices” for at least five years following that acquisition.
To be included in the index, bonds must be rated investment grade. Lehman determines if a bond is investment grade by its listed credit rating by Moody's. Investment grade bonds have a score of Baa or higher on the Moody's scale. For bonds that are unrated by Moody's, an S&P rating of BBB or higher is sufficient. The index measures performance by total return, which includes the capital appreciation or depreciation of the bond, combined with its coupon income as a percentage of the original investment.
Examples of Other Bond Indexes
The Lehman Brothers Government/Corporate Bond Index is just one example of a benchmark index. Some indexes cover a broader array of investments, while others focus on a specific investment category. These indexes are often used by investors or those who manage investment portfolios for others as a way to gauge the performance of a particular fund, security or group of investments.
In some cases, the matter of whether an index is an accurate benchmark in the official sense of the word is a topic of debate. Some indexes are not considered benchmarks by some industry observers, but they are still a tool that measures the performance and activity of an investment instrument over time. The Dow Jones Industrial Average (DJIA) is a good example. One of the most well-known securities indexes, it is not necessarily considered to fall under the benchmark term by all industry professionals.