what was the idea behind the creation of TOBAM?

TOBAM’s founder, Yves Choueifaty is a mathematician who spent all his career in the asset management industry. Before creating TOBAM, he was the CEO of Credit Lyonnais Asset Management, where he had been working for 12 years. He started there as a an intern and ended up CEO. After he left, he went back to research with the aim of confirming a mathematical observation which he had always been intuitively convinced of:  market cap-weighted benchmarks are highly inefficient and a research-based solution was lacking for investors looking to more efficiently capture the risk premium, the beta of an asset class.

After conducting extensive research, he had an idea that was robust enough to be the basis upon which to construct a business. Tobam was created in 2005, and the Maximum Diversification® approach first patent filled in 2006.

why did you call your strategy the anti-benchmark®?

We believe benchmarks have a role to play in the asset management industry. They are representative of the market, they are the sums of all speculations and as such, provide information for asset managers and investors. However, they need to remain an output of the market rather than used as an important input. The trend over the last 20 years within the passive management industry to use market cap weighted benchmarks as inputs is a mistake which has a high destructive potential for the economy.

We at tobam have implemented a unique strategy, based on the Maximum Diversification® approach, which allows to capture the risk premium of an asset class without biases. As opposed to the benchmarks that are hugely biased, the Anti-Benchmark® is in a way the absence of strategy, we are the truly neutral risk allocator.

how do you explain TOBAM’s success?

TOBAM was one of the founders in 2005/2006 of what has been later called the “Smart Beta” movement. We are not big fans at TOBAM of the expression “Smart Beta” since it is lacking a clear definition, and as scientific minds, we don’t like undefined terminology. We don’t know whether we are smart but we believe that we provide the Beta.

The Maximum Diversification® Approach and the Anti-Benchmark® strategy answered needs that were unanswered before. Our development strategy since the beginning was to start reaching the largest pension funds in the world, and they indeed were our first clients.

TOBAM was also set up in a very rigorous way and we made sure to construct our strategies based on solid academic research grounds.

We see ourselves as a chain of value and a chain is only as strong as its weakest link. This is why at tobam, we focus on what we do best and outsource other functions such as middle office, legal, communication, accounting and even sometimes distribution to who we believe are unquestionable partners.

Tobam’s sole and unique objective is answering its clients’ needs in the most efficient and rigorous way.