TOBAM Stepping Out into Fixed Income Smart Beta
In an October 9th announcement, TOBAM unveiled a brand new fixed income smart beta strategy: Anti-Benchmark US Credit Strategy. The Paris-based asset manager entered the smart beta equity space in 2006, and this is their first foray into fixed income. According to a press release, a leading institutional investor seeded the strategy with an initial contribution of US$ 30 million in May 2014.
“The heavy structural biases that plague market-cap weighted equity indices plaque issuer-weighted bond indices just the same,” said Christophe Roehri, Head of Business Development, in the statement. “Investors are coming to realize that issuer-weighted corporate bond indices do not provide a diversified risk allocation. The Anti-Benchmark US Credit strategy is the result of years of pioneering research and provides investors with a unique strategy in the fixed income world.”
For the new strategy, TOBAM is applying its patented maximum diversification methodology to fixed income in an attempt to capture the credit risk premium. In terms of benchmarks, the strategy strives for lower volatility and returns of 120 basis points higher than the Merrill Lynch US Corporate Index by 120 basis points per year.
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