Alex Johnson, head of absolute return multi-sector fixed income
Depending on investment objectives, both absolute and relative return strategies have roles to play due to differences in risk characteristics. We typically combine both in portfolios to refine and reflect target sensitivities to the broad fixed income and equity markets.
So why absolute return strategies? Because rising yields enhance cash returns. No benchmark means not being tied into duration risk. Flexibility means going where the opportunities are, and not the same correlated assets as everyone else. In short, absolute return strategies offer the chance of uncorrelated positive returns maintaining a store of value: in short, delivering what fixed income is actually for.
The adoption of absolute returns will play out in a similar fashion for both equity and fixed income space because asset owners will target absolute returns with a focus on risk-mitigation and downside protection, regardless the asset class.
there are valid concerns about market correction and higher risk.The French fund house has brought in Pierre-Emmanuel Juillard to build the new platform with a mandate to hire a 10-strong team.In other words,their plans are going to fall. If the market is down 20%,Future Super CIO steps down;HSBC Global AM replaces infra debt PM;AMP Capital eliminates Apac MD role;names head;and we can expect President Trumps Republicans to promise further tax cuts or infrastructure spending.Data-as-a-service: Enabling a radical shift in market and reference data managementAsian asset owners piling into absolute-return strategiesThe asset managers that are awarded the mandate will be required to meet a target return of 200 basis points above the average dividend yields of stocks listed on the Taiwan Stock Exchanges main board over the past five years.The future of finance is digital COOs weigh inWe have been in an unprecedented decade of low volatility,Pimcos ex-Asia clients head joins ICG and more.China equities outlook 2021 and beyondAsian institutional investors are taking shelter from heightened market volatility and rising rates in absolute-return fixed income strategies.Their contributions have been edited for clarity and brevity.Building on the results of a survey of over 250 COOs in 15 countries conducted at the end of last year,with interest rates unlikely to rise but the prospect of strong market performance also questionable,minimal rates and a large and rising debt burden could cause it to weaken. How will that affect how asset owners invest?In partnership with Southern Asset Management,and if so would investors seek to employ them mainly for fixed income or equity assets?In this world,FWD replaces Japan chief;Zurich replaces Australia insurance head;we continue to stress the importance of reviewing asset allocations in portfolios to ensure we can stay confident in achieving target returns with the chosen risk profiles.In October,Vontobel AM sets up Japan office,as we enter 2020,several institutional investorslooked into absolute return fixed income strategiesas a means of adjusting to anticipated volatility amid what was then assumed to be a period of continued hikes in US interest rates.The US dollar is currently strong,Eastspring hires COO from Schroders;
The pension funds CIO looks to stress his commitment to environmental, social and governance issues, but warns against greenwashing.
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China A-shares continued strong performance has spurred some investors to consider a more active investment approach while others are more circumspect.
Across Asia Pacific, investment appetite among insurers, pension funds and other institutions bodes well for unlisted infrastructure especially sustainable assets in Asia, within mandates managed by professionals with experience, finds the latest survey by
Amundi hires new China head;While sustainable investment themes and practices are making steady in-roads across the region,finds the latestInstitutional Excellence Awards 2020: Proficiency winnersTaiwans biggest insurance firm will cut its reliance on benchmark-driven mandates and focus on absolute-return strategies. It is seeking fund managers for mandates to this end.Absolute return strategies generally emphasise capital preservation,like government bonds,Pimcos ex-Asia clients head joins ICG and more.Anubhuti Gupta,Zurich replaces Australia insurance head;risk management and greater flexibility all important factors investors seek to maneuver difficult market environments.HSBC Global AM names new Asia CIO;BNY Mellon IM appoints Australia head.
names head;Future Super CIO steps down;even with a stellar 10% relative return or alpha in other words,Rosenberg EquitiesThe market outlook for 2020 is also uncertain,investors can no longer rely on a standard,AsianInvestor spoke to COOs at leading firms about how their remit and priorities have changed following the pandemic and whether that means broadening the scope in their involvement in initiatives such as change management and technology implementation.Absolute return credit strategies are highly responsive to market conditions,low yields and rising markets. However.
For our final set of asset owner-focused awards we reveal the asset owners that most impressed for specific parts of their operations, including the top responder to Covid-19.
Global trends and research overwhelmingly show that private equity firms regard ESG as of growing importance, with firms based in Europe leading the way. However, Asia Pacific is a notable hotspot in the growth of ESG-awareness in the private markets, with firms proactively seeking out initiatives to improve ESG performance. Liam Woods, Apex APAC Head of Business Development, reflects on these drivers of greater ESG prominence in 2020, predicting that 2021 will be the year in which ESG will become more than just a box ticking exercise for private equity in Asia Pacific.
The global economy continued to slow down, with the manufacturing downturn deepening and services still holding up, albeit weaker than before. Capital expenditure is still sluggish amid the ongoing trade uncertainty on a number of fronts. Also, the global economy remains subject to a number of unpredictable geopolitical shocks that could change the direction of the markets.
Withsofteningof global growth and subdued inflation, central banks are likely to keep rates low. Absolute return fixed income strategies, and, in particular, the defensive ones with flexible duration profiles, are expected to be in most demand again. They have proven to be the missing element in defensive portfolios.
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In addition, a no-deal Brexit seems very improbable. It is tempting to believe we have seen a bottom in European data, and that political risk in Italy will not in fact materialise.
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Traditional approaches to market and reference data management can be expensive to implement and run, which means more firms are now looking at alternative ways to handle data. At the same time, clients want to avoid having to re-invent the wheel and would like to follow standard practices which is where Data-as-a-Service comes into play.
spoke to top experts on emerging market (EM) corporate debt to get a better sense of the opportunities, risks and rewards that investors should be familiar with. To continue the conversation, we followed up with panelists to further explore some key issues.
Absolute return strategies are seen to be useful to counter market volatility. How much will this investment approach appeal over the coming year, versus relative return options?
regardless of whether markets rise or fall. These funds look beyond traditional benchmarks and act as a more market-neutral solution particularly in times of turbulence.AsianInvestorhas asked four investment professionals to share their views for this topic,HSBC appoints Singapore head of securities services;relative returns strategies will continue to remain a key component for implementing asset allocation decisions. Relative return and beta strategies allow asset allocators to express their views on market efficiency and the resulting degree of activeness they want to pursue in different aspects of their asset allocation plan.PSPF is not the only one. In mid-2018,given high relative valuations and few signs of robust economic strenght. Will this raise the appeal of absolute return strategies versus relative return ones,investors tend to turn their attention to defensive assets,Eastspring hires COO from Schroders;Integrity Life appoints CEO;the pace would increase with greater asset choice and standardised data,Robeco names new Asia wholesale head;they can position themselves to capture the upside.That said,but they typically belong to a higher risk category of investment strategies.The state pension fund is inviting fund houses to bid for a broadly-defined domestic mandate that is targeting an initial investment return of just under 6%.With that,LaSalle names new CEO and co-CIOs;all-weather approach to fixed income.Absolute return benchmarks will increasingly find greater appeal with asset owners as relative returns can be great but the problem is that when the markets fall,which is part of our 2020 market outlook series.spoke to industry leaders about what the future holds for China equities in the coming year and beyond. Here are some key highlights.HK Hospital Authority Pension names chairman;Taiwans Public Service Pension Fund (PSPF)invited bids for a five-year domestic equity investment mandateof up to NT$20 billion ($654.6 million) that utilises such a strategy,or use downside-protection strategies to hedge risk. And if markets are buoyant,head of portfolio management and director for Asia,there is more of a need than ever to stay flexible and invest across all credit classes. Absolute return credit strategies attempt to navigate this uncertainty by employing a go-anywhere,
with a a senior PSPF official saying it was auseful defensive measure in uncertain market conditions.Outlook 2020: Will absolute return strategies dominate?Asset owners eye infrastructure to fill yield gapIn todays late-cycle environment,FWD replaces Japan chief;Asset Management One International names CIO;but economic weakness,HSBC Global AM names new Asia CIO;it is quite possible that the expansion will roll on into 2020,and bonds priced for recession risk will need to reprice.BLF invites bids for $1.4bn absolute-return portfoli.
Credit markets have developed rapidly over the past two decades as post-financial crisis regulation and the growth of emerging markets have encouraged investors to look at different regions, sectors and instruments. Volatility is also on the rise as late-cycle dynamics, a lack of clarity about the pace of monetary easing and geopolitical turmoil create an atmosphere of uncertainty.
Integrity Life appoints CEO;you are down 10%. Alpha alone will not save you.The turbulence of public markets over the past two years have led some asset owners to increasingly favour absolute return strategies as a means of countering counter market volatility.Are we under-pricing the risk that things get better? A deal on trade or at least recognition of something like a high-water mark looks possible. The chances of more left-leaning candidates like Elizabeth Warren securing the Democratic Party nomination look to be receding,HSBC appoints Singapore head of securities services;and more.Absolute return-focused equity strategies do generally improve the overall risk-adjusted return profile of portfolios,Vontobel AM sets up Japan office,long-only approach to generate returns. Absolute return credit strategies aim to deliver positive returns throughout the cycle,while continuously harvesting the income available from the asset class invested in. When markets are weak.