Which measure is seen as the best for portfolio-level spread?

The option identified as the best measure for portfolio-level spread is the option focused on the Option-Adjusted Spread (OAS). The OAS is particularly useful because it accounts for the embedded options in the securities within a portfolio, allowing for a more nuanced understanding of how these options affect the spread.

When managing a portfolio that contains bonds with options, such as callable bonds or putable bonds, the OAS incorporates the value of these options into its calculation. This is beneficial because it helps investors accurately assess the yield spread relative to the benchmark after adjusting for interest rate risk and the various cash flow scenarios that can arise from the options.

This aspect makes OAS preferable for evaluating the risk and return profile of a bond portfolio, as it reflects an actual investment’s risk exposure more precisely than spreads that do not adjust for embedded options. In contrast, measures like G-spread, I-spread, and Z-spread do not fully consider the impacts of these options, potentially leading to misleading interpretations of a bond's risk and return.

Consequently, for portfolio managers who must consider the complexity of multiple securities with varying structures, the OAS provides a clearer picture for assessing spreads at the portfolio level.