Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Big trends in bonds and credit allocations
Institutional allocation to global fixed income strategies has been rising in recent times, according to the latest research rep[ort from Foresight Analytics, an Australian-based specialist investment research firm. “Yield-based” strategies have stood out, while other manager performances have been “mixed”.
The ‘Global Fixed Income Report‘ for 2019 says that the global fixed income sector and asset class have done “very well” over the past year and, pretty much, the previous decade, off the back of falling interest rates around the world.
In 2019, emerging markets outperformed developed market returns. The UK, Canada, Italy and Australia were among the best performers in the developed world.
“While yield dispersion across major segments remain high, investors need to avoid sectors with high risk and low returns,” the report says. “Active manager performance has been mixed across most styles, but yield-based styles stand out the most.”
Foresight Analytics was founder by director and analyst Jay Kumar. The report says: “Dispersion between the fixed income managers is very wide for key portfolio and return drivers. “Investors need to compare managers of similar style to ensure apple-to-apple comparisons.,” the report says. “Dispersion on performance and risk are also very high, reflecting greater dispersion of style and factor biases.”
– G.B.
