In November 2024, TASE launched 3 new bullet indices, comprising bonds with a same-year final maturity. This initiative aligns with TASE's strategic plan to expand the variety of investment products available to investors, and to encourage competition that will generate a broader range of products at competitive prices for the public. Bullet indices are designed to allow investors to fix the yield to maturity of a bond portfolio with specific characteristics. Unlike most indices, Bullet indices have a final date of redemption and cease to exist upon the redemption of their final constituent bond. This defensive product caters to investors who aim to lock in the yield to maturity of a diversified bond portfolio.
With the introduction of the three new indices, the Tel-Bond family now encompasses 48 indices, providing investors with a comprehensive suite of investment opportunities.
Over the past year, which was characterized by low risk appetite, bullet funds have emerged as one of the most popular and highly recommended investment products.
Meitav Mutual Funds will be the first to launch investment products on the 3 indices, and TASE expects to see more companies launch new products on bullet indices. The new funds will offer some of the lowest management fees in this category.
The novelty of the index lies in its use of government bonds or T-bills as a substitute for the bond that is redeemed during the redemption year, whereby the proceeds from the final redemption of corporate bonds are reinvested into a “filler” with a weight equivalent to that of the redeemed bond. For each index, a specific series is designated as filler bond, and the weight of the filler bond in the index increases over the index’s redemption year, as the constituent corporate bonds are redeemed, ultimately resulting in an index comprised solely of filler bonds. When the filler bond reaches maturity, the index is terminated.
The launch of bullet-type indices in the bond market is gaining momentum, and this segment already features three index Administrators calculating more than 40 indices, with products tracking those indices totaling NIS 3.2 billion.
TASE will continue to expand the variety of investment products available to the public to enhance competition and reduce index product costs.
Following is a description of the 3 new bullet indices:
|
Index name |
Summary description of the index |
|
Tel-Bond Bullet 2029 ILS |
The index comprises a basket of unlinked, fixed-rate, corporate bonds issued by issuers incorporated in Israel, with a minimum A- rating on launch date and a final maturity date within the year 2029. |
|
Tel-Bond Bullet 10/2028 CPI |
The index comprises a basket of CPI-linked, fixed-rate, corporate bonds issued by issuers incorporated in Israel, with a minimum A- rating on launch date and a final maturity date within the 12 months ending on 10/10/2028. |
|
Tel-Bond Bullet 2029 Israel |
The index comprises a basket of CPI-linked and unlinked, fixed-rate, corporate bonds issued by issuers incorporated in Israel, with a minimum A- rating on launch date and a final maturity date within the year 2029. |
