INSTITUTIONS AND WEALTH MANAGERS TURN THE SPOTLIGHT ON YIELD
Date
5/16/2024 4:16:24 AM
(MENAFN- Perceptiona)
Institutional investors and wealth managers are turning their focus to yield as opposed to growth in response to the changing geo-political and macroeconomic environment, new research* from Managing Partners Group (MPG), the international asset management company, shows.
Around 80% questioned in the study with institutional investors and wealth managers worldwide with assets of €107 billion under management say their funds will increase their focus on yield over the next 12 months with 11% saying there will be a dramatic increase in the focus on yield.
The professional investors expect yields in the fixed income sector and allocations to the sector to increase over the next 12 months but are less positive on the next six months, the research found.
Around three out of four (72%) expect yields in the fixed income sector in general to rise over the next 12 months with 9% predicting a dramatic increase. Up to 74% expect allocations to fixed income assets to rise over the same period with 22% predicting a dramatic increase in allocations, the study by MPG which runs the Melius Fixed Income Fund found.
Nearly half (45%) say the funds they manage are under-exposed to fixed income currently with just 9% believing they are over-exposed and 46% estimating they have the right level of exposure.
Around 29% questioned believe yields in the fixed income sector will fall in the next six months as central banks worldwide cut interest rates while 45% are expecting increased yields. Nearly three out of four (74%) have increased allocations to fixed income over the past six months as returns have improved.
MPG is adding Life Settlements to its Melius Fixed Income Fund, which invests in corporate and high yield bonds, targeting up to an equal split between Life Settlements and other assets.
Life Settlements are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value. They have little or no correlation to equites and bonds. MPG says alternative asset classes in general are set to benefit from increased diversification as investors look for reasonable returns while equities are set for a tough year ahead.
Jeremy Leach, Chief Executive Officer at MPG, said: “Rate cuts by central banks worldwide are widely expected and that is likely to affect fixed income yields.
“But rising geopolitical tensions and the changing macroeconomic environment coupled with growing concerns about stock market volatility means that professional investors are still very much focused on yield as opposed to growth and the hunt for yield is likely to be the dominant theme of the year ahead.
“Market pricing on Life Settlements currently generates a yield of 12% on a discount driven basis which is why we are adding them to our fixed income fund as they will contribute strongly to yields.”
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