Insights

Overall, in our view there may be some temporary volatility ahead which investors can try to sidestep or even take advantage of, but it’s probably not worth trying to be too cute as our medium term outlook is still constructive.

After a perfect pandemic storm, the US Federal Reserve and other supertankers are filling their holds with strange cargo. This may seem like the age of indiscriminate buying – hardly a strategy many investors find alluring. Meanwhile, often-shunned merchandise from emerging markets may look promising to a discerning eye.

This video explains how CLOs are structured, how the process works for investors and what protections are in place for bondholders.

This video explains how TwentyFour’s unique ESG integration process works, and how our purpose-built relative value tool, Observatory, allows our portfolio managers to monitor bond issuers’ ESG credentials on a daily basis.

The Bank’s ability to dampen market volatility has certainly been a comfort to fixed income investors; over the last month £ IG spreads have moved in a range of just 4bp and ended tighter than they started, which compares rather favourably to the 5% peak-to-trough swing in GBP-USD over the same period.

A cut by the Fed or the BoE from here would mean negative rates, while the ECB already has its deposit rate deeply negative at -0.5%.

As autumn approaches, Head of Corporate Bonds Mondher Bettaieb and Portfolio Manager Claudia Fontanive-Wyss believe developed market corporate credit is entering a sweet spot. In this Viewpoint, they explain why.

There are still plenty of potential bumps in the road (Brexit, the US election, COVID-19 developments and so on) but the positive technical created by dwindling supply has the potential to push spreads tighter in coming months.

We expect September to be relatively busy with new ABS deals, but there’s a very strong technical developing in favour of ABS and CLOs, which should help performance in the coming months.