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Our Smart Beta approach on Global Sovereign Bonds

24.07.2017

Factor investing and Smart Beta strategies have been a major trend among equity investors in the recent years. The trend came hand in hand with a growing demand for passive investment solutions, lower management costs and most importantly better risk-adjusted return investments.

Less common in the Fixed Income universe, it was not until very recently that the Smart Beta Fixed Income funds started to occur. This delay is caused by the complex characteristics of the asset class (i.e. tracking rate sensitivity, curve/duration, spreads, correlations etc). Another reason why smart beta equity strategies have been more successful is the relative lack of historical data available to study and the marginal difference in terms of management fees between active and passive fixed income solutions.
In this paper we would like to address our findings relative to fixed income smart beta and why such strategies are interesting from an investor’s stand point.

 

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