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Since their introduction in 2013, AT1 bonds have acted as a valuable kicker for many fixed income funds, having consistently delivered excess return over more mainstream credit markets such as high yield bonds over the medium term.

Negative Schlagzeilen rund um Private Credit haben dieses Jahr zugenommen: Ein Kurseinbruch bei Software-Titeln und die Aussetzung der Rücknahmen bei mehreren Publikumsfonds haben den Druck auf die Branche erhöht.

The terms private credit and life insurance have appeared together in multiple negative headlines in recent weeks, and to casual observers the link between the two may not be immediately obvious.

Earlier this month, we wrote about the high cost of staying in cash in the Euro market. In that note, we argued that a combination of inflation, low front-end rates and steeper curves, favoured a rotation out of cash and cash like instruments into other alternatives that delivered better real returns, including credit. Building on this argument, we wanted to extend this perspective to the US dollar market and highlight a few key points.

In our latest Multi-Sector Bond quarterly update, Jakub Lichwa, Portfolio Management, discusses why we retain a favourable view on credit despite tighter spreads.

In November 2023, we estimated that holding cash, as opposed to staying invested, could cost investors 10-30% over a three-year period. At the time, we highlighted that interest rates had reached their cyclical peaks and were likely to decrease from that point.