‘Alternative’ global government bond strategy from Pictet
From Product News Feb 22 2012 BY: Simon Danaher
, Online News Editor
, International Adviser
Pictet Asset Management has launched a global government bond fund which will use an “alternative” strategy to select bonds based purely on the country’s ability and willingness to pay.
The firm said the Pictet-Global Bonds Fundamental Fund will invest in global government bonds using a “fundamental framework to determine an issuer’s ability and willingness to honour its debt obligations”. This means the fund, which is Luxembourg domiciled and Ucits compliant, will make no distinction between developed and emerging market sovereign borrowers.
Pictet, the asset management arm of Swiss private bank Pictet & Cie, said the fund is an alternative to bond strategies which rely on traditional market-capitalisation weighted fixed income benchmarks, indices which suffer from a number of “structural flaws”.
The company explained that a conventional debt-weighted index forces investors to buy the bonds of sovereigns that borrow the most, irrespective of whether that debt burden is sustainable over the long term. Pictet added that this also limits currency diversification and restricts investors’ ability to capitalise on the rapid economic and capital market expansion being seen across the developing world.
The new fund is lead managed by Mickael Benhaim, co-head of global & regional bonds.
Sébastien Eisinger, head of fixed income, said: “As an alternative or as a substitute to traditional investing, investors should start by analysing the fundamentals. Only then will they be able to reduce the risks and maximise the opportunities that are emerging in this period of rapid change for the world economy.”