Within the alternative fixed income space, three strategies that align responsible investing stand out: ABS, SME loans and government-guaranteed loans
After the initial financial turmoil caused by the worldwide outbreak of Covid-19, spreads in liquid fixed income asset classes widened significantly. However subsequent performance has been strong and spreads have tightened considerably. Around 70-80% of the losses of market value in these asset classes has been recovered. But as yields tighten, where’s next for institutional investors? What options can they consider for their strategic asset allocation and long-term objectives?
We have entered the second half of the year. Institutional investors often now begin considering ALM studies and reviewing their asset allocation for the year to come. Amongst the lessons learned from the very volatile first half of 2020 is that alternative fixed income emerged as a highly resilient asset class. Alternatives stand out as an option to gain additional yield, driven by factors such as illiquidity, size and complexity. Furthermore, they offer investors diversification benefits as well as stable returns compared to more traditional investments. In addition, the asset class can help investors manage their ESG risk objectives.
Within the alternative fixed income space, three strategies that align responsible investing stand out: Asset Backed Securities, SME loans and government-guaranteed loans. These strategies are discussed in more detail in the full article.
