BlackRock’s exchange-traded fund arm has outlined some of the practical hurdles the fixed income ETF market faces before smart beta strategies are introduced.
Speaking at a roundtable event, iShares’ European head of fixed income product strategy Brett Pybus said there was a lot of work to be done before bond ETFs with a smart beta underlay were brought to market.
Smart beta strategies aim to add value by selecting, weighting and rebalancing portfolio holdings using certain characteristics to control risks and deliver targeted outcomes.
In terms of what they look like in practice, Mr Pybus said fixed income was a less defined concept when compared to equities.
“One of the things that has been happening in fixed income markets for a long time is customising indices,” he said, adding that certain strategies had entered the market which “could be construed” as smart beta, but had not been packaged up and sold that way.
Advisers can get one hour’s worth of structured CPD by reading last month’s FTAdviser Guide to Smart Beta.
katherine.denham@ft.com
