Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Benchmarkers Inject Bond Bogeys with a Dose of Fundamentalism Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, February 10, 2010

Benchmarkers Inject Bond Bogeys with a Dose of Fundamentalism

News summary by MFWire's editors

Fundamental indexing is coming to the fixed income world, thanks to a firm that popularized the concept on the equity side of the business and a bond benchmarking house. Research Affiliates LLC (RAFI) and Ryan ALM Inc. have joined forces to create the fundamental indexes, reports the Wall Street Journal's Fund Track column.

The new indexes evoke the methodology used by Pimco for its Global Advantage Strategy Bond Fund. That fund weights its national holdings by GDP, essentially weighting the fund by income rather than outstanding debt. The fund has gathered about $1.3 billion since its launch last year, according to the paper.

Fundamental indexing uses basic business measures such as sales or dividends rather than market capitalization metrics to weight indexes. Most traditional bond indexes, for example, are weighted by the each issuers debt outstanding.

However, RAFI's nine bond indexes will be using sales, profits, book value of assets and dividends to weight their holdings. They will cover corporate bonds, including both investment-grade and high-yield issues and group issues by maturities one to five years, five to ten years and more than ten years. Each index will contain only a few hundred issues compared to thousands in commonly used indexes.

The number of issues will be limited by RAFI's decision to use only the largest issue for each company.

RAFI founder and chairman Rob Arnott tells the paper that the weighting will allow investors to avoid concentrating their portfolio in companies that issue large amounts of debt.

"If you owe more money, why should your creditors want to own more of your debt?" he asks the paper. 

Edited by: Sean Hanna, Editor in Chief


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2024: Q4Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use