Mon, 21/01/2013 - 10:01
High yield bonds are forecast to be among the top performing assets in 2013, according to a survey by investment information specialist Camradata.
Along with emerging market equity and equity, high yield bonds were in the predicted top three asset classes chosen by asset managers, pension fund investment professionals and insurance investment specialists.
Optimism about the investment environment ahead was tempered, however, by the top three issues which continue to influence investor behaviour. The euro crisis, continuing low interest rates and the fall-out from the US fiscal cliff, were all very much in the foreground.
When asked what issues were likely to impact their organisations directly, regulation, the competitive environment and pressure on margins were the top three concerns.
Users of the Camradata Live database who took part in the survey at the end of 2012, saw high yield bonds as an attractively diversified investment in a continuing low-interest rate environment, both in terms of in-flow and returns. This was true across the asset management, pension and insurance investment communities.
The survey also uncovered a conundrum: institutional investors had identified equities as the biggest opportunity for high returns yet none were planning to invest in them.
Camradata founder and managing director Steve Butler says: “On the one hand, there was agreement that equities will offer high returns. On the other, no-one was willing to write the cheque. We can only guess that the spectre of volatility continues to stalk this asset class.
“It’s perhaps a further indication of another central finding - these investors are seeking new and innovative ways to gather returns. This suggests managers really need to get under the skin of investors to find a palatable way forward with original investment strategies.”
There was also further evidence that insurance investment managers were thinking more about the Solvency II regime with liability-matching strategies such as low-risk assets in line with their claims profile.
And it was the insurance respondents who were the gloomiest about the prospects for the year ahead, followed by asset managers. Pension fund opinion was divided on whether to be optimistic or pessimistic about European institutional investment in 2013.
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