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‘Factors can generate substantial premiums for credits too’But according to Houweling, there are differences to equities. “We can apply the concepts we use for equities to corporate bonds, but it is more than just a case of copy/paste. Some factors have to be defined in different ways to take into account the specific characteristics of corporate bonds." Together with Robeco researcher Jeroen van Zundert he carried out extensive empirical research into the possibilities for generating extra returns. Next to the three factors Low Risk, Value and Momentum applied in Robeco’s equity factor strategies, they also included a Size factor. What are the five most important lessons for corporate-bond investors?
‘Ratings work, but there are more effective methods’