Simon Peters, Investment Strategist
Fund: Algebris Financial Credit Fund
Where to Find Income in a Yield Desert
In the current landscape, yield is scarce and bound to remain scarce. Global central banks easing has suppressed yield in high quality assets, which have traditionally represented the core of long-term investment portfolios. Currently, 27% of global Fixed Income assets yield negative, while less than 5% of the bond universe yields north of 3%.
European financial bonds offer high value, as attractive yields co-exist with strong credit quality (most issuers are Investment-grade). As financials are not included in central bank QE programs and are off-index, they offer meaningful spreads (up to ~300bps for AT1s), even in a tight market.
Maxim Vydrine, Portflio Manager
Fund: Amundi Funds Emerging Markets Green Bond
Amundi is a pioneer in the Green Bond markets and currently has over EUR32bn in AUM in the space. Amundi has been very active in trying to grow the EM Green Bond Market and in 2018, together with the World Bank’s IFC (International Finance Corporation) established the very investment vehicle for investors to access Emerging Markets Green Bonds, raising EUR 1.5bn in the closed-ended, Amundi Planet Emerging Green One Fund.
Given the success of the fund, the growth in the nascent market and demand from investors, in 2020 Amundi launched the first open-ended fund for EM Green Bonds.
The strategy offers investors diversification in Green Bonds and primarily holds hard currency issuance by corporates. The broad portfolio delivers an attractive risk reward profile through a low modified duration of 4.3 years, and a yield of over 3.5%, which is significantly higher than many developed market Green Bonds. In addition to investing in Green bonds the fund incorporates a strong ESG policy, is SFDR 9 and reports on impact as well as ESG metrics.
Partner, Senior Portfolio Manager
Fund: BlueBay Emerging Market Unconstrained Bond Fund
An unconstrained approach to investing in Emerging Market Debt
The BlueBay fund combines high-conviction positioning with benchmark-unconstrained implementation in order to deliver the most compelling outcomes. The strategy has been tested across market cycles over its 10-year track, delivering exceptional risk-adjusted long-term returns, as well as excellent peer rankings. As we sit here today, the global economy faces great uncertainty and we believe this backdrop provides opportunities for active investors, particularly, in our view, those open to taking an ‘unconstrained’ approach, which seeks to capitalise on the dispersion and asymmetry caused by such an environment.
Paul Syms, CFA, Head of EMEA ETF Fixed Income Product Management
Fund: Invesco AT1 Capital Bond UCITS ETF
Improving portfolio outcomes with AT1 capital bonds
With traditional fixed income valuations having been distorted by central bank policies, where can investors find an attractive level of yield without having to increase their duration risk or exposure to riskier issuers? In this session, we will explore the evolution of the AT1 capital bond market and consider the potential impact of an investor adding AT1s to their core fixed income portfolio. If inclusion can help improve risk-adjusted returns, the question then turns to the best way to gain exposure to this innovative asset class. Can ETFs offer the ideal solution in a maturing market?