Institutional and Wholesale Investors Look to Asian Fixed Income for Diversification and Yield, Says New Global Research
New York, NY, October 27, 2021 --(PR.com)-- Institutional and wholesale investors anticipate increasing their exposure to fixed income assets from issuers in Asia in an effort to further diversify their holdings and earn higher yields, according to new research published by Institutional Investor and Eastspring Investments.
The research report – “Discern and Diversify: Asian Bonds Increasingly Sought for Better Diversification” – finds that investment decision makers at institutions around the world are especially concerned with near-term economic growth, rising inflation, and the forthcoming tapering policies from the US Federal Reserve and other monetary authorities. In response, institutions are likely to increase their holdings of bonds issued in Asia.
Other highlights of this survey of close to 200 investment decision makers at institutions in Asia, Europe, and North America include:
- 70% of institutional and wholesale investors seek to further diversify their fixed income exposure, and 66% anticipate doing so by expanding their holdings of new bond classes in new markets.
- 73% of investors agree that Asian bonds offer higher risk-adjusted returns compared with those issued in developed markets.
- Two-thirds of respondents anticipate increasing their holdings of Asian fixed income assets in the next year, most often with sovereign debt or investment-grade bonds.
- A majority of survey respondents endorse active strategies when investing in Asian fixed income. High-conviction strategies are especially suitable, say 57% of respondents in the study.
- Challenges to investing in the region’s fixed income assets include concern about corporate governance, data quality, and reporting standards (42%); the liquidity of Asian fixed income markets (39%); and a perceived lack of suitable offerings from the region’s asset management firms (38%).
“As the world’s economies emerge from the pandemic institutional investors confront an unfamiliar dilemma: rising volatility and correlations between equity and bond markets, which may reveal portfolios to be insufficiently diversified to withstand an inflationary environment,” says Sam Knox, managing director of II’s custom research group.
While this research reveals that investors see Asia as a likely source of fixed income assets that will deliver somewhat higher yields along with insulation from market volatility, investors remain concerned about governance, information quality, and liquidity in the region. “Investors in this study believe the source of successful strategies hinge on their – or their asset manager’s – deep knowledge and expertise in Asian markets and its fixed income issuers,” says Knox.
The survey of close to 200 investment decision makers at pensions, foundations, endowments, insurers, and wholesale institutions in Asia, Europe, and North America was conducted by Institutional Investor’s Custom Research Lab and Eastspring Investments between July-September 2021.
The research report can be downloaded at: https://www.institutionalinvestor.com/media/documents/institutional-investor/tl/ASIAN%20FI--Discern%20and%20Diversify-FINAL%2021%20OCT%202021.pdf
Contact: Michael Corcoran, Managing Director, Institutional Investor Editorial, Memberships, and Thought Leadership
Email: Michael.corcoran@institutionalinvestor.com
Phone: 212-224-3158
The research report – “Discern and Diversify: Asian Bonds Increasingly Sought for Better Diversification” – finds that investment decision makers at institutions around the world are especially concerned with near-term economic growth, rising inflation, and the forthcoming tapering policies from the US Federal Reserve and other monetary authorities. In response, institutions are likely to increase their holdings of bonds issued in Asia.
Other highlights of this survey of close to 200 investment decision makers at institutions in Asia, Europe, and North America include:
- 70% of institutional and wholesale investors seek to further diversify their fixed income exposure, and 66% anticipate doing so by expanding their holdings of new bond classes in new markets.
- 73% of investors agree that Asian bonds offer higher risk-adjusted returns compared with those issued in developed markets.
- Two-thirds of respondents anticipate increasing their holdings of Asian fixed income assets in the next year, most often with sovereign debt or investment-grade bonds.
- A majority of survey respondents endorse active strategies when investing in Asian fixed income. High-conviction strategies are especially suitable, say 57% of respondents in the study.
- Challenges to investing in the region’s fixed income assets include concern about corporate governance, data quality, and reporting standards (42%); the liquidity of Asian fixed income markets (39%); and a perceived lack of suitable offerings from the region’s asset management firms (38%).
“As the world’s economies emerge from the pandemic institutional investors confront an unfamiliar dilemma: rising volatility and correlations between equity and bond markets, which may reveal portfolios to be insufficiently diversified to withstand an inflationary environment,” says Sam Knox, managing director of II’s custom research group.
While this research reveals that investors see Asia as a likely source of fixed income assets that will deliver somewhat higher yields along with insulation from market volatility, investors remain concerned about governance, information quality, and liquidity in the region. “Investors in this study believe the source of successful strategies hinge on their – or their asset manager’s – deep knowledge and expertise in Asian markets and its fixed income issuers,” says Knox.
The survey of close to 200 investment decision makers at pensions, foundations, endowments, insurers, and wholesale institutions in Asia, Europe, and North America was conducted by Institutional Investor’s Custom Research Lab and Eastspring Investments between July-September 2021.
The research report can be downloaded at: https://www.institutionalinvestor.com/media/documents/institutional-investor/tl/ASIAN%20FI--Discern%20and%20Diversify-FINAL%2021%20OCT%202021.pdf
Contact: Michael Corcoran, Managing Director, Institutional Investor Editorial, Memberships, and Thought Leadership
Email: Michael.corcoran@institutionalinvestor.com
Phone: 212-224-3158
Contact
Institutional Investor
Michael Corcoran
212-224-3300
www.institutionalinvestor.com
Michael Corcoran
212-224-3300
www.institutionalinvestor.com
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