Citi, Research Affiliates launch global investment-grade bond index

By Tali Rackner

Norfolk, Va., Feb. 12 - Citi and Research Affiliates LLC announced the launch of the Citi RAFI World Corporate Investment-Grade Bond Index, the companies announced in a press release. The new smart beta solution offers a transparent means of implementing credit portfolios.

"This new index offers lower credit risk, lower volatility, and better risk-adjusted returns over full market cycles than traditional market value-weighted indices," Rob Arnott, chairman and chief executive officer of Research Affiliates, said in the release.

The index is based on the RAFI Fundamental Index concept developed by Research Affiliates. It offers a transparent, rules-based foundation for investment that has low implementation costs, high capacity and provides broad, diversified access to the fixed income markets. The index has generated higher risk-adjusted returns to comparable market value-weighted bond indices, largely due to lower volatility, based on historical simulations, the companies said.

The index uses two factors in weighting bonds in the portfolio: long-term assets, which represents the portion of assets that long-term bondholders have a claim on, and cash flow, which reflects debt service capacity.

Based in Newport Beach, Calif., Research Affiliates is focused on investing and asset allocation strategies. Citi is a global financial services company.

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