why invest in the credit default swap index cdx 
the cdx is completely standardized and exchange traded unlike single cdss which trade over the counter otc as such the cdx index has a high level of liquidity and transparency cdx indexes also may trade at smaller spreads than cdss thus investors may hedge a portfolio of default swaps or bonds with a cdx more cheaply than if they were to buy many single cdss to achieve a similar effect finally the cdx is a well managed tool that is subjected to intense industry scrutiny twice a year the existence of tools such as cdx indexes makes it easier for both institutional and individual investors to trade in complicated investment products that they otherwise might not want to own separately the cdx index came into being in the early 2000s a complicated time in financial markets perhaps to help make investing in complex high risk potentially high yielding financial products a little less complicated and a little bit safer later the lcdx was created which is also a credit derivative index with a basket made up of 100 single name loan only cdss the difference is that all of the cdss in the lcdx are leveraged loans although a bank loan is considered secured debt the names that usually trade in the leveraged loan market are lower quality credits therefore the lcdx index is used mostly by those looking for exposure to high yield debt but with greater risk 