Not Your Grandfather’s US Aggregate Bond Index
June 2026
By John Flynn, CFA, Senior Managing Director – Business Development & Marketing
The US Aggregate Bond Index is a market capitalization-weighted benchmark which endeavors to represent most of the investment grade bond market in the United States including treasuries, agencies, corporate, mortgage backed, and a smaller component of other securitized bonds. The index got its official start in 1986 and, to the chagrin of more than a few investors, has undergone several name changes over the past few decades. Originally known as the “Lehman Aggregate Bond Index,” the name changed to the “Barclays Capital Aggregate Bond Index” in 2008 after Lehman Brothers succumbed to the Great Financial Crisis. That name was held until 2016 when Bloomberg purchased Barclays’ index business in 2016. Today, the index is formally called the “Bloomberg US Aggregate Bond Index” (“Aggregate”) and as of May 29, 2026, represented almost 14,000 issues and $31 trillion in market value of US investment grade bonds. Almost all Core, Core Plus, and Multi-Sector bond market mandates use the index as their primary performance benchmark.
Given the longer liabilities of most fixed income allocators, the duration mismatch of the benchmark has been largely accepted due to its broad exposure, history and transparency. Over the last several decades, the underlying constituents and sectors have undergone a structural but meaningful change that has significantly increased the exposure to the US Treasury market, subsequently increasing the index’s duration and reducing the yield available to investors. A key driver of this has been the surge in treasury issuance with a significant portion being further out on the curve. Figure 1 details the percentage exposure of US Treasuries in the Aggregate bond index from 2000 through 2025. The exposure has more than doubled over this timeframe, which has helped increase the average index duration from about 4.6 in 2000 to 5.8 at the end of 2025.
Figure 1: Treasuries % in the Bloomberg US Aggregate Bond Index
Source: Bloomberg
After decades of being a tailwind to fixed income performance, 2022 was a strong reminder on the impact duration could have on a bond portfolio as the Aggregate returned -13.0% that year. While the change in the interest rate regime has been welcomed by fixed income investors that were challenged to find attractive income options for well over a decade, the yield per unit of duration should cause investors to investigate other investment grade options to enhance yield and dampen the impact of higher exposure to treasuries in their Core fixed income allocation.
Figure 2: US Aggregate Bond Index YTW% & Duration
Source: Barclays Live
Figure 3: YTW / Duration as of 5/31/2026
Source: Barclays Live
The change in interest rate regime beginning in 2022 has had an overall positive impact on the income opportunity relative to interest rate risk for the Aggregate. However, the securitized sector has historically been underrepresented in the Index. Figure 3to the right details the current relationship between yield (shown as Yield to Worst or YTW) and Duration.
To improve returns and the income opportunity, Investment Managers have utilized allocation tilts to the spread sectors and allocations to non-index securities. To counter the doubling of treasury exposure, we believe it is prudent for fixed income allocators to continue to explore the attractive income opportunity prevalent in non-index securities.
So, where can investors find lower duration, attractive income opportunities outside of their Aggregate exposure? Figure 4 below compares the Aggregate’s average spread as of 5/29/26 to market segments not currently included in the Aggregate, but represents a significant yield enhancement opportunity with comparable credit quality. Senior debt in the CLO market benefit from significant credit enhancement, shorter durations, and perceived structural complexities that drive the spread premium over similarly rated securities. The ABS market has broadened over the years, and attractive opportunities and yield enhancement can be found outside of the cards and auto sectors included in the Aggregate Index. Lastly, we believe that CMBS represents a sub-optimal exposure to the US commercial mortgage loan market, and investors may benefit from evaluating actively managed CML approaches. If pursued, investors should expect reduced liquidity, however, we believe they will be well-compensated for that with better credit quality and an attractive spread pick up.
Figure 4: Spread Comparison: US Aggregate Index vs. Non-Index Sectors May 2026
Source: Barclays Live, Bank of America, and Symetra Investment Management
Note – Core CMLs (Commercial Mortgage Loans) data from Symetra Investment Management. For comparative purposes, the spread shown above represents 5-year Core loans which should be considered to have limited liquidity.
The Bloomberg US Aggregated Bond Index is not going to be replaced. Its long history and broad representation of the US investment grade bond market make it an attractive option for investors to benchmark their performance. That said, it is always best practice to understand what’s included in your benchmarks and how they may have changed. Gaps in the Aggregate’s exposure plus the growing number of investment grade, non-index income opportunities afford investors a chance to optimize their exposure, enhance yield, and dampen interest rate risk.
About the Team
Team Average Years of Relevant Experience: 17
*Denotes Years of Relevant Experience as of 6/1/2026
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