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Fixed Income: Uncovering opportunities in sub-asset classes

  • Posted by: ,  Chief Executive
  • 14 November 2017
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What else is out there?

Aside from simply reducing credit quality or extending duration, in today's low-rate environment fixed income investors have been increasingly exploring sub-asset classes in order to enhance yield.  

The following papers delve into opportunities within a host of fixed income sub-asset classes, including: distressed debt, CLOs, securitised bonds, green bonds, emerging markets, infrastructure, trade finance, and U.S. municipals.Savvy Investor

U.S. Municipals - Markets in Focus (Franklin Templeton, Oct 2017)
(For compliance reasons, this paper is only accessible in the EMEA region)
This report explores the shifting global focus to munis, particularly by European investors. Some factors adding to the attractiveness of taxable U.S. municipal bonds include their credit quality, low correlation, and long duration.

Loans offering value, with or without rate increases (Eaton Vance, Nov 2017)
(For compliance reasons, this paper is only accessible in the USA and Canada)
In this Q&A, Ralph Hinckley offers his perspective on the floating-rate loan market for the balance of 2017.

Investing in Distressed Debt (CAIA, 2017)
Over the last two decades, distressed debt investing has risen in popularity. The market has increased in size with PE firms and hedge funds becoming key players. This paper provides a helpful overview of the asset class.

CLOs: An Acronym for Contrarian Long-Term Opportunity (PIMCO, 2017)
In this 6-page paper by PIMCO, the authors discuss collateralized loan obligations - what they are and why it's important that investors understand their key structural features.

Sub-investment grade bonds for insurers: Senior secured loans (Invesco, 2017)
(For compliance reasons, this paper is only accessible in certain geographies)
With many investors looking beyond traditional asset classes for attractive risk-adjusted returns, one asset class that has seen growing interest from insurers is Senior Secured Loans (SSLs).

A Shifting Cash Landscape: EU Reform Investor Survey (SSGA, 2017)
The EU's money market reform will go into effect on 21 July 2018 for new funds, and on 21 January 2019 for existing funds. This report by SSGA surveys 100 investors preparing themselves for the regulatory change.

Institutional guide to Bond ETFs (BlackRock, Oct 2017)
(For compliance reasons, this paper is only accessible in the USA)
BlackRock presents their all-new digital guide to trends in institutional bond ETF adoption, as well as case studies, analytical tools, and resources pertaining to ETFs.

FTSE Russell China Bond Research Report
This latest report from FTSE Russell will help you analyze and understand how liberalisation measures, anti-leverage policies, and the consideration on index inclusion are evolving in China, the third largest domestic currency bond market.

Does 'buying the dips' work for EMD? (Fidelity International, Oct 2017)
(For compliance reasons, this paper is only accessible in the UK & Europe)
This paper by Fidelity International finds that applying a market timing strategy that enters the market after a correction lags the returns of the index by a long way.

Not just Green Bonds: Awakening the green giant (Fidelity International, 2017)
(For compliance reasons, this paper is only accessible in the UK & Europe)
The ‘green’ bond market remains modest. However, by focusing upon carbon reduction, a specific environmental outcome is targeted, potentially increasing the asset class's overall appeal as a core strategy within a balanced bond portfolio.

An introduction to infrastructure debt (Macquarie, 2017)
Investing in infrastructure debt can provide institutional investors with long-dated, high quality cashflows that can be used to match liabilities, to diversify their risk exposure, and as a yield enhancement over corporate bonds.

Securitised Bonds: Finding Security in Bond Markets (RLAM, 2017)
This paper explains how securitised bonds reduce credit risk, why it is possible to buy the right kind of security at attractive prices, and how fixed income investors can take advantage of an institutional reliance upon credit agencies.

Five things to know about frontier market debt (NNIP, Nov 2017)
(For compliance reasons, this paper is only accessible in certain geographies)
Marco Ruijer, Lead Portfolio Manager Frontier Market Debt at NN Investment Partners, explains why investors should consider an allocation to frontier market debt in their portfolio.

Private Debt: Diversification with illiquid assets (TIAA, Sep 2016)
Amid market uncertainty and record-low interest rates, private debt addresses institutional investors’ desire for yield and lower volatility. This 15-page paper by TIAA discusses the opportunity for illiquid asset diversification.

Emerging Market Corporate bonds – coming of age (Aberdeen AM, 2017)
An asset class continually defying the odds: despite concerns of increasing geopolitical risks, slow global growth, and high debt levels, emerging markets corporate debt has once again delivered another year of impressive results.

Bank Loans: Looking Beyond Interest Rate Expectations (Loomis Sayles, Apr 2017)
The current mix of interest rate projections and global macroeconomic news may stymie some fixed income investors. Bank loans may be a compelling addition to fixed income portfolios in this environment and over the long term.

Sector in Brief: Trade Finance (bfinance, Oct 2017)
The trade finance sector has evolved substantially since 2012-15.  This paper provides an overview of the trade finance asset class and highlights key issues for investors.

Fixed Income Monthly (Fidelity International, Nov 2017)
(For compliance reasons, this paper is only accessible in the UK & Europe)
This monthly report provides a forward-looking summary of the medium-term views from the Fidelity International Fixed Income team. It provides a macro and rates overview, insights into inflation-linked bonds, high yield bonds, and more.

Money Market Forecast, Fourth Quarter (SSGA, Oct 2017)
This report explains what's been happening in money markets recently. It also explores the prospects for Q4 2017.

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