Warning sounded on credit fund concentration risks
Allocations to funds based on corporate bond indexes raise issues that investors seem unaware of, such as US high yield's correlation to the oil price, according to new research.
The downsides of investing based on traditional market cap-based equity indexes are well documented, but many investors do not realise that credit markets face similar issues, said Raphael Thuin, fixed income portfolio manager at Tobam, a Paris-based smart-beta fund house.
As a stock's value rises, so does its weight in an market cap-weighted equity benchmark, he noted, and the same is true of corporate bonds, posing significant concentration risks to both passive and active manag…
Please sign in or register
for free access to 1 article per month from AsianInvestor’s content and archives of over 16,000 articles.
¬ Haymarket Media Limited. All rights reserved.