Investors focus on credit and inflation linked investment strategies
01 June 2018 London
Image: Shutterstock
New research from Tabula Investment Management has revealed that investors look to focus on credit and inflation linked investment strategies.
According to the research, when considering a range of fixed income and debt investment vehicles, those linked to credit and inflation will see the biggest increase in demand from investors.
Investors highlighted investment grade credit where 42 percent of those interviewed expect demand to increase compared to 10 percent who think it will fall, the research conveyed.
Additionally, it revealed that some 48 percent of institutional investors and wealth managers expect demand for inflation strategies to increase between now and 2020, and just two percent anticipate a fall.
The findings from Tabula discovered that other fixed income/debt strategies that investors expect to see a net increase in demand over the next two years include high yield credit, emerging market debt, and asset backed securities.
Meanwhile, demand for government bonds will remain relatively flat.
Michael John Lytle, chief executive of Tabula Investment Management, said: “Our findings reflect investors increasing focus on the impact of inflation and for signs that it’s going to pick up. Many are beginning to make changes to their portfolios in preparation for this.”
He continued: “Increased demand for investment grade credit reflects investors’ continued search for yield, and difference between implied and realised default rates. The implied default rates are the yields on the securities which are there to compensate investors for the credit risk of the issuer. Today’s yields far outstrip the actual (realised) default rates over the last forty years.”
Lytle added: “Our findings also highlight the growing demand for a wider range of fixed income and debt investment products, which we plan to capitalise on with our range of exchange traded funds that we plan to start launching soon.”
According to the research, when considering a range of fixed income and debt investment vehicles, those linked to credit and inflation will see the biggest increase in demand from investors.
Investors highlighted investment grade credit where 42 percent of those interviewed expect demand to increase compared to 10 percent who think it will fall, the research conveyed.
Additionally, it revealed that some 48 percent of institutional investors and wealth managers expect demand for inflation strategies to increase between now and 2020, and just two percent anticipate a fall.
The findings from Tabula discovered that other fixed income/debt strategies that investors expect to see a net increase in demand over the next two years include high yield credit, emerging market debt, and asset backed securities.
Meanwhile, demand for government bonds will remain relatively flat.
Michael John Lytle, chief executive of Tabula Investment Management, said: “Our findings reflect investors increasing focus on the impact of inflation and for signs that it’s going to pick up. Many are beginning to make changes to their portfolios in preparation for this.”
He continued: “Increased demand for investment grade credit reflects investors’ continued search for yield, and difference between implied and realised default rates. The implied default rates are the yields on the securities which are there to compensate investors for the credit risk of the issuer. Today’s yields far outstrip the actual (realised) default rates over the last forty years.”
Lytle added: “Our findings also highlight the growing demand for a wider range of fixed income and debt investment products, which we plan to capitalise on with our range of exchange traded funds that we plan to start launching soon.”
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