TOBAM brings Maximum Diversification to fixed income

Paris, October 9th, 2014 – TOBAM announced the launch of its “Anti-Benchmark US Credit Strategy”. Having implemented the Anti-Benchmark strategy in the universe of equities since 2006, the successful application of the strategy to bonds for the first time represents a significant breakthrough in TOBAM’s research and execution capabilities. With the launch of this strategy, and after having being a pioneer in the equity smart beta field since 2006, TOBAM distinguishes itself once again as one of the pioneer in fixed income smart beta strategies. Bringing together the research of 12 investment experts, the strategy has been designed to implement the Anti-Benchmark attributes while overcoming the specificities of the corporate debt market.

Corporate bond benchmark indices are usually weighted according to the volume of debt issued, leading to heavy concentrations and bias notably towards a limited number of sources of risks. Financials and financial services issuers for example have recently been over-represented. The strategy, as well as the research associated with it, represents a unique approach for investors looking for core exposure to the US Credit market while avoiding structural biases.

TOBAM’s patented Maximum Diversification approach neutrally allocates risk to all the effective independent risk factors available in a given market and aims to deliver the credit risk premium to investors within the investment universe. On average, the strategy endeavours to outperform the Merrill Lynch US Corporate Index by 120 basis points per annum with less volatility.

Christophe Roehri, Head of Business Development, declared:

The heavy structural biases that plague market-cap weighted equity indices plague issuer-weighted bond indices just the same. 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.

Initially seeded with $30 million dollars in May 2014 from a leading institutional investor, the strategy has already garnered strong interest and is expected to become a flagship in TOBAM’s Anti-Benchmark range.