Fixed income funds enjoyed a good year in 2020, with strong investment flows from investors seeking safety in central bank-supported bonds, as the pandemic ripped apart stock markets.
Pandemic-spurred policy “revolution” will continue to drive asset allocations in 2021, says BlackRock
The world’s largest asset manager, BlackRock, has predicted that the “revolution” in monetary and fiscal policy spurred by the Covid-19 pandemic will dampen government bond real yields in 2021. The asset manager favours inflation-linked bonds, as well as risk assets such as equities and high-yield credit.
Institutional investors are taking defensive positions into 2021, as they attempt to cushion portfolios against the long-term impact of the pandemic, including the fallout from government and central bank responses to the Covid-19 crisis.
Investors piled back into value stocks as November’s twin breakthroughs in the search for an effective vaccine against Covid-19, by Pfizer/BioNTech and Moderna, renewed optimism and prompted a huge rally in global markets.
Investor appetite for emerging markets has been on the rise, boosted by hopes of a vaccine-led recovery from the coronavirus pandemic, and by Joe Biden’s victory in the US presidential election.
Investors are buying back into safe-haven US government bonds, after expectations of a ‘blue wave’ Democratic victory in the ongoing vote-count for the US presidential election were dashed, causing yields to slide by 0.12 per cent in one day.
Fixed income managers are eyeing the US market with caution as the Presidential election draws nigh, the outcome of which could spell major implications for bond yields, interest rates, and the US dollar.
Conning’s GEMS Economic Scenario Generator selected by the NAIC to provide scenario files for the US life insurance industry
Conning, a provider of risk and capital management software and professional services to the financial industry, has been chosen by the National Association of Insurance Commissioners (NAIC) to provide its GEMS Economic Scenario Generator scenario files for use in calculations of life and annuity statutory reserves and capital under the NAIC RBC requirements.
Soaring debt levels across the world will keep interest rates at rock-bottom levels for years – or even push them into negative territory – and fuel a rise in boom and bust cycles, Aegon Asset Management has warned.
Value investing could see a revival as economic activity picks up in the wake of the Covid-19 pandemic, as asset managers predict that lowly-rated stocks could outperform in the upturn.