How do passively managed indexed bond funds assign the different weights to their constituent investments?
Is a bond index fund, similarly to stock indexes, trying to hold a slice of all existing outstanding bonds out there (subject to eligibility criteria)?
The bonds included in the index are probably determined according to some ranking metric. Then, afterwards, what is it that determines how much face value amount is invested in a particular issue that made the cut? What's the equivalent of the "market cap" from the stock market, in the bonds world?
In case this question can only be answered with specifics, I'm asking this to better understand how to compare the performance of two bond funds on the Toronto Stock Exchange (TSX).
iShares XQB (High Quality Canadian Bond Index ETF) seeks to replicate the FTSE Canada Liquid Universe Capped Bond Index, net of expenses.
Horizons HBB (Cdn Select Universe Bond ETF) seeks to replicate the Solactive Canadian Select Universe Bond Index (Total Return), net of expenses.