Smarter beta: Multi-factor investing for corporate credit

Olivier Laplénie finds that smart beta fixed income for corporate debt is best informed by a subtle combination of bond and equity indicators

Smart beta has generated greater demand from clients around the world for alternatives to traditional indices and there has been considerable response from asset managers of equities portfolios. In fixed income, however, progress in smart beta has been later and slower because of the relative lack of transparency in bond markets and consequent paucity of data.

The latest smart beta offering from THEAM overcomes these obstacles by virtue of our deep experience in both fundamental and quantitative fixed income investing as well as a rich proprietary database of historical transactions. Smart beta strategies can flop in practice because of the naivety of the portfolio construction and transaction costs. We have used our parent, BNP Paribas Investment Partner’s extensive research capabilities to thoroughly model a realistic and robust proposition.

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