Indexology^® Blog

Mexico’s recent rating actions have brought renewed attention to the country’s sovereign credit profile. Moody’s downgraded Mexico in May 2026, while S&P Global Ratings revised its outlook to negative. For fixed income investors, the key question is not only what changed from a ratings perspective, but also how those events translated into market performance.

Bond indices provide a useful lens through which to assess these effects. Comparing Mexico’s rating actions in 2020, 2022 and 2026, the data suggest a nuanced conclusion: Mexican risk repriced following these events, but the market reaction has generally appeared contained rather than disruptive.

Sovereign Bonds: Repricing, but Context Matters

Mexican sovereign yields moved higher around the rating actions, but each episode occurred against a different market backdrop.

In 2020, S&P Global Ratings and Fitch downgraded Mexico in March, followed by Moody’s in April. However, those rating actions coincided with the global COVID-19 market shock, making the moves difficult to separate from broader risk aversion.

In July 2022, Moody’s downgraded Mexico again during a period of aggressive tightening by the Fed and Banxico, so higher yields may have reflected a combination of both interest rate pressures and credit concerns.

In 2026, yields rose around the May rating downgrade, suggesting some repricing of sovereign risk. However, the increase remained below levels observed during periods of prior market stress, pointing to repricing rather than a broader market dislocation.

Relative Performance: Broadly Aligned with Emerging Market Benchmarks

Total return performance tells a similar story. UMS bonds saw some weakness around rating action windows, but performance generally moved in line with Latin American and broader emerging market sovereign benchmarks.

In 2020, UMS bonds sold off sharply, broadly in line with Latin American and emerging market sovereigns during the COVID-19 shock. In 2022, Mexico showed modest underperformance around the July downgrade, but other emerging market sovereigns were also under pressure amid Fed tightening. In 2026, Mexico lagged modestly during the May pullback, but its performance remained broadly aligned with emerging market sovereign benchmarks, with early signs of narrowing in June.

The key message is that Mexican sovereign bonds repriced, but index performance does not suggest a standalone or strong Mexico selloff.

FX Translation: S&P/BMV Index Versions Highlight the Currency Effect

Foreign exchange (FX) matters for Mexican peso-based holders of U.S. dollar-denominated Mexico sovereign debt. Comparing the U.S. dollar and Mexican peso versions of the S&P/BMV Sovereign International UMS 5–10 Year Target Maturity 30% Capped Bond Index helps isolate the currency effect. Across the rating action windows reviewed, FX either reduced or enhanced performance reported in Mexican pesos.

In May 2026, Mexican peso strength reduced performance reported in that currency by approximately 1.09%, while in July 2022 and March-April 2020, FX translation added to Mexican peso-reported performance.

The index comparison shows that the credit signal did not consistently translate into Mexican peso weakness; rather, FX appeared to be influenced by broader factors.

Conclusion: Isolate the Drivers of Mexican Sovereign Debt Performance

The practical takeaway is that evaluating Mexican sovereign debt could involve more than a single risk factor. A more precise view distinguishes between sovereign credit repricing, local rates, broader emerging market risk sentiment and currency effects.

Mexico’s rating headlines matter, but the index data suggest they may be better viewed in a broader market context. Across the periods observed, Mexican UMS bonds generally moved in tandem with Latin American and broader emerging market sovereign benchmarks.

The author would like to thank Sofia Lozada for her contributions to this blog.

This content may be AI-assisted and is composed, reviewed, edited, and approved by S&P Global.

How does a commodity index track liquid futures while seeking to address inflation and volatility in global markets? Look inside the DJCI 3 Month Forward – Quarterly Reweight, a rules-based index that emphasizes diversification and liquidity through a methodology with four distinct elements.

In June 2023, S&P DJI expanded the S&P Dividend Aristocrats^® Series with the launch of the S&P 500^® Sector-Neutral Dividend Aristocrats Index. The addition proved timely, as over the past three years, the technology-driven Information Technology and Communication Services sectors have fueled much of the S&P 500’s significant gains amid the rise of AI. While most dividend strategies have notably underperformed during this period due to their underexposure to these sectors, the sector-neutral design of the S&P 500 Sector-Neutral Dividend Aristocrats Index has clearly enabled it to keep pace with—and even outperform—the S&P 500 in recent times (see Exhibit 1).

In celebration of the index’s three-year milestone, this blog will review its short- and long-term performance, offer a quick overview of its methodology and highlight its current key attributes—such as dividend yield and valuation—which remain compelling compared to the S&P 500 today.

Performance

The S&P 500 Sector-Neutral Dividend Aristocrats Index has outperformed the S&P 500 on both a one-year and YTD basis, while also keeping pace with the S&P 500 over the three-year live period (see Exhibit 1). The strong recent performance is notable for a dividend-focused strategy, considering that the S&P 500’s gains have been predominantly driven by high momentum, growth-oriented technology companies capitalizing on the AI boom.

Methodology Overview

The S&P 500 Sector-Neutral Dividend Aristocrats Index starts by screening for companies that have maintained or increased dividend per share for at least 15 consecutive years, subject to a relaxation rule. From this subset, the index then selects the top 20% of companies within each GICS^® sector based on the highest indicated annualized dividend (IAD) yield.

Performance Comparison

Over the back-tested period since January 2005, the S&P 500 Sector-Neutral Dividend Aristocrats Index has kept pace with the S&P 500, delivering an impressive double-digit annualized gain for more than twenty years. The index delivered this performance while also showing moderate downside protection, as evidenced by its downside capture ratio of 94.68.

Index Characteristics

Exhibit 4 shows that as of May 31, 2026, the S&P 500 Sector-Neutral Dividend Aristocrats Index yielded 2.91%—2.7 times the S&P 500’s 1.07%, which is the lowest yield for the S&P 500 since January 2005, the beginning of the studied period. The S&P 500 Sector-Neutral Dividend Aristocrats Index has distinguished itself in today’s market environment by delivering a significantly higher yield than the S&P 500, while steering clear of large sector bets amid this period of technological transformation.

As of May 31, 2026, the S&P 500 Sector-Neutral Dividend Aristocrats Index traded at a significant discount to the S&P 500 across all three major valuation metrics (see Exhibit 5). On average, it traded at a discount of 37% compared to the S&P 500.

Conclusion

The sector-neutral design of the S&P 500 Sector-Neutral Dividend Aristocrats Index has been a significant advantage, allowing it to outperform both the S&P 500 and most other dividend strategies over 2025 and YTD. Currently, the index shows a markedly higher dividend yield than the S&P 500—while also trading at a notable discount. These characteristics are notable, given they are achieved without any sector bets relative to the S&P 500—which could be an important advantage during this distinctive period of technological change.

North American institutional asset owners have been using exchange-traded funds (ETFs) for more than a decade, but the way they use them has evolved. What began as a set of short-term tactical applications—manager transitions, portfolio completion and liquidity management—has expanded into long-term strategic uses. Sizable assets are now being deployed and held in ETFs for several years across a widening set of asset classes.

To learn more about this evolving dynamic, S&P Dow Jones Indices engaged Crisil Coalition Greenwich to survey 150 institutional asset owners across channels and sizes in the U.S. and Canada.¹ The findings from the study shed light on asset owners’ ETF usage, the benefits from their perspective and their key evaluation criteria.

Why Asset Owners Are Turning to ETFs

Institutional allocators point to a consistent set of characteristics when describing why they hold ETFs. Liquidity ranks first in both equities and fixed income. Ease of use, low management fees and quick access to markets follow closely behind (see Exhibit 1).² Together, these attributes have outweighed the benefits of other investment vehicles in certain instances. In fact, institutional asset owners report using ETFs to replace wrappers they have historically relied on for index-based and active strategies, including index mutual funds, institutional separate accounts and active mutual funds.³

A Growing Range of Use Cases

The study points to a clear shift in how ETFs are being applied. Nearly two-thirds (63%) of passive ETF assets in North American institutional asset owner portfolios are now categorized as long-term strategic allocations—the most common use cited—versus less than half (45%) for tactical short-term applications (see Exhibit 2).⁴ Holding periods reflect that view: 46% of allocators report average passive ETF holding periods of more than two years.⁵

Use cases are also extending beyond core equity beta. Institutional asset owners in the study describe using ETFs across fixed income segments and thematic strategies, and some report emerging interest in using ETFs to access private markets.⁶ Actively managed ETFs are in demand as well. More than 20% of institutions reported plans to increase active ETF allocations over the next three years.⁷

Who Is Using ETFs and What They Look For

ETF usage spans institutional asset owner types and asset bases. According to the study, over half (54%) of North American institutions now use ETFs.⁸ When looking across segments, 70% of insurance companies and 71% of endowments and foundations report allocating to ETFs, and adoption among public and corporate pensions continues to expand.⁹ Among these ETF users, the largest institutions represent the most significant investors; 62% of those with more than USD 10 billion in assets under management reported ETF holdings.¹⁰

When selecting an index-based ETF, decision makers look most closely at expense ratio, liquidity/trading volume, tracking error and benchmark construction. For active ETFs, similar criteria apply with an added emphasis on historical performance and asset manager reputation.¹¹ Roadblocks remain, though, as the most common reason non-users cite for not investing in ETFs is lack of organizational approval. Still, more than half of non-users in the study reported they are actively considering ETF adoption.¹²

How Investment Universes Are Evaluated

Indices serve as the backbone for both passive and active ETF strategies, and the institutions surveyed reflect that in how they evaluate index providers. The top characteristics they look for are methodology consistency, rigor and transparency; cost efficiency for linked products; liquidity of underlying benchmarks; and historical track record.¹³ Those criteria align with the broader role index providers play in supporting transparency and governance across the market. As use cases extend into less-traveled corners of the market—including fixed income segments, thematic ideas and other specialized areas—the depth of index design and asset class expertise behind an ETF can become a more critical part of institutional allocators’ considerations.

A New Normal

The results of the Crisil Coalition Greenwich 2026 North American Institutional ETF Study reveal a market in which ETFs started as tactical tools and have now become a core part of institutions’ long-term investment strategies. Adoption has broadened, holding periods have lengthened and use cases continue to expand. To explore the results further, read the full report.

¹ The Crisil Coalition Greenwich report “ETFs in institutional portfolios: The new normal” was sponsored by S&P Dow Jones Indices. Please see pages 2 and 3.

² Please see page 7 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

³ Please see pages 5 and 6 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

⁴ Please see pages 2 and 11 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

⁵ Please see page 11 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

⁶ Please see pages 7, 12 and 15 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

⁷ Please see page 14 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

⁸ Please see page 3 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

⁹ Please see page 5 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

¹⁰ Please see pages 3 and 4 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

¹¹ Please see page 8 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

¹² Please see pages 2 and 17 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

¹³ Please see page 10 of Crisil Coalition Greenwich’s “ETFs in institutional portfolios: The new normal.”

Market-cap-weighted indices like the S&P 500^® that offer a broad measure of the market have long served as the foundation of passive investing. With valuations at elevated levels and sector concentration—particularly in technology—near historic highs, we examine alternative weighting methods that may provide broader and complementary views.

Revenue weighting offers a complementary approach: by weighting companies proportionally to their top-line sales, the S&P 500 Revenue-Weighted Index, S&P MidCap 400^® Revenue-Weighted Index and S&P SmallCap 600^® Revenue-Weighted Index¹ anchor weights to economic activity rather than market value. These indices may exhibit broader sector diversification and lower valuation multiples, while maintaining the characteristics of passive investing.

In this blog, we review the historical performance, risk-adjusted returns, valuation characteristics and diversification effects of revenue-weighted index construction.

Long-Term Outperformance versus Benchmarks

The S&P 500 Revenue-Weighted Index has outperformed the S&P 500 as well as the S&P 500 Equal Weight Index across both short- and long-term periods. This trend extends to mid- and small-cap equities; the S&P MidCap 400 Revenue-Weighted Index and S&P SmallCap 600 Revenue-Weighted Index have also outperformed their respective equal- and market-cap-weighted benchmarks (see Exhibit 1).

Enhanced Historical Risk-Adjusted Performance

As illustrated in Exhibit 2, the revenue-weighted indices also showed superior risk-adjusted performance compared to their equal- and market-cap-weighted counterparts, across both short- and long-term horizons.

Lower Valuations Relative to Benchmark Universes

Exhibit 3 illustrates that, as of June 30, 2026, the S&P 500 Revenue-Weighted Index was trading at lower valuation ratios compared to both the S&P 500 and the S&P 500 Equal Weight Index. This trend has also been observed historically over the long term, as shown in Exhibit 4. Additionally, the mid-cap and small-cap revenue-weighted versions consistently demonstrated lower price multiples relative to their respective benchmarks.

Sector Diversification

As illustrated in Exhibit 5, the Information Technology sector comprised 38.03% of the S&P 500 as of May 31, 2026—representing an all-time high. In comparison, the S&P 500 Revenue-Weighted Index demonstrated greater sector diversification, with less dispersion across sector and individual stock weights, and a higher effective number of sectors and stocks. While sector weights tend to be more balanced in mid- and small-cap indices, revenue weighting still provides a differentiated view relative to traditional benchmarks.

Conclusion

Revenue-weighted indices can be complementary to traditional market-cap-weighted indices. By anchoring company weights to revenue, these indices have historically preserved a broad equity view while reducing concentration and valuation risk. Over the back-tested history, the S&P 500 Revenue-Weighted Index, S&P MidCap 400 Revenue-Weighted Index and S&P SmallCap 600 Revenue-Weighted Index have exhibited strong total returns and risk-adjusted outperformance, along with a more pronounced value tilt and higher diversification.

¹ Please refer to the S&P Revenue-Weighted Index Series Methodology for more details.

² Effective number of sectors is the inverse of the Herfindahl-Hirschman Index (HHI), which is the sum of squared sector weights for each index.

³ Effective number of stocks is the inverse of the Herfindahl-Hirschman Index (HHI), which is the sum of squared stock weights for each index.