Ossiam, Solactive, Moody’s add to bond smart beta market

Euronext ParisOssiam has listed a bond ETF in Paris, adding to the relatively undeveloped area of smart beta in the fixed income asset class.

The firm, which is an affiliate of Natixis Investment Managers, has listed the Ossiam Solactive Moody’s Analytics IG Eur Select Credit ETF on Euronext Paris.

The index that the ETF is benchmarked to differentiates itself from traditional credit benchmarks because it seeks to maximise the total return of a liquid and diversified basket of euro-denominated investment grade corporate bonds, while maintaining a low credit risk profile, Ossiam said.

Bonds selected from the index – the Solactive Moody’s Analytics IG Eur Select Credit Index – are then further reduced using a metric based on the expected default frequency of the issuers, among other measures devised by Moody’s including capital structure.

Bruno Poulin, chief executive of Ossiam, said: “While it is extremely difficult to make predictions of future credit market behaviour, a systematic investment strategy based on companies’ long-term performance, equity valuation and capital structure goes a long way towards providing investors with a rational basis for selecting high-grade corporate bonds.”

Timo Pfeiffer, head of research at Solactive, said: “Smart beta bond strategies have until now only represented a small share of the global demand for smart beta, which is dominated by equities. However, smart beta is becoming more and more prevalent in the fixed-income space and we are happy to contribute to this trend with this new index.”

The ETF has a total expense ratio of 0.35%.

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