NETHERLANDS – Dutch institutional investment manager Robeco has advised its institutional clients holding euro denominated fixed-interest investments to replace the current government loans index with an index consisting of both government loans and credits.

The firm notes that it has become commonplace for institutional investors to include credits in euro bond portfolios and recommends that they now use an index that contains credits as a benchmark for the portfolio policy.

“ An index consisting of both government bonds and credits is a better reflection of the current EMU bond market,” adds Robeco.
The firm adds its belief that the risk/return profile of such an index is more attractive than that of an index consisting exclusively of government bonds.

Robeco points out that it has chosen an index provided by Lehman Brothers in the US and says other asset managers such as PIMCO have made similar moves.
“ Credits have been an important asset class in Robeco’s fixed-interest portfolios for quite some time. The use of a new index will not change the investment process, only the reference is new,” says the manager.