Pioneer Investments has launched a Global GDP-weighted Government Bond strategy as a new approach to sovereign debt management – shifting from a market-cap weighted approach to a Gross Domestic Product (GDP)-weighted approach, with the aim of delivering more yield without increasing credit risk.
For those countries where investing in cash bonds is not an option (such as China, South Korea and India), Pioneer Investments’ approach will aim to synthetically replicate the index exposures of these key countries, using derivatives.
The strategy will be managed utilising Pioneer Investments’ Fixed Income Alpha Strategy Matrix under the direction of lead Portfolio Managers Tanguy Le Saout (pictured), head of European Fixed Income, and Cosimo Marasciulo, Head of European Government Bonds. Based on a custom-built GDP weighted benchmark, designed by Pioneer Investments, the strategy aims to benefit from this more intelligent starting point, as a key differentiating factor versus traditional market cap weighted indices, and will leverage off Pioneer Investments’ long-standing matrix approach employing uncorrelated alpha strategies.
The key features of Pioneer Investments’ Global GDP-weighted Government Bond strategy
- Portfolio Construction based on the sophisticated alpha/beta separation approach within the “matrix”
- Custom built GDP weighted benchmark/beta
- Scalable uncorrelated alpha sources
- Global diversification
- Aiming for attractive yield
- High quality investment grade portfolio
Pioneer Investments’ European Investment Grade Fixed Income Team focuses on the separation of alpha from the core strategy by actively seeking out the most attractive markets. The emphasis is on taking small amounts of risk across many uncorrelated positions. Risk takers are held accountable for their specific markets and alpha strategies.
With a best-in-class fixed income franchise, Pioneer Investments is amongst the top 10 bond companies globally by AUM. Pioneer Investments’ global Fixed Income team consists of 108 investment professionals including 69 portfolio managers, 32 analysts and 7 traders managing €129,106bn across a full range of fixed income solutions.
“We believe that a Global Government Bond strategy investing in future growth instead of past debt is a viable solution for fixed income investors seeking higher yields and more diversification,’’ said Le Saout.