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Inflation and war in Europe have thrown bond investors into a world of unprecedented challenges. However, in a survey of 342 institutional investors, 64% said they are likely to increase their exposure to EM Bonds. Why?
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This study, surveying over 300 investment decision makers in Europe, Asia and the Americas, examines investors’ interest in fixed income assets in emerging markets and their expectations for altering their allocations in the next two years.
Asia-Pacific | Deutschland & Österreich | España | France | Italia | Schweiz | United Kingdom & Ireland
In the euro zone inflation is at an all-time high of 5%; in the US its headed towards a four-decade peak, and in emerging markets it’s surging. The return of inflation has spooked bond investors, and rightly so as inflation corrodes bond investors’ returns, decimating real yields (yield minus inflation). This was the case before the war in Ukraine, which has further exasperated investors’ concerns and injected a massive dose of uncertainty to the mix.
At the same time, yields remain stubbornly low, providing scant buffer from the onslaught of these woes. This combination of crises, rising prices and low yields heralds a shift to a new paradigm in the bond markets. How can fixed income investors tackle these challenges and continue to generate returns? We believe active management holds the key by capturing and seeking to exploit market inefficiencies. There’s always value to be found in fixed income, we aim to help you find it.
Inflation has risen to multi-decade highs, stoking fears of more aggressive central bank policy and creating a headwind for fixed income markets.
At the same time, a lengthy market rally has left yields near record lows, weakening the protection of safe assets and narrowing the opportunity set for investors seeking income.
The global fixed income universe offers opportunities regardless of where we are in the market cycle, as various sectors and geographies move through different phases.
As high conviction, active managers, we can help you extract value wherever it presents itself.
So, whether you require a core allocation solution, or a complete set of bespoke building blocks, we can help bring your investment goals to fruition.