XxX | Feature
Contents
Editorial
RE-THINKING FIXED INCOME
Could debt be the new black? After a year of low yields, the drought might be over and institutional investors may need to re-examine their fixed income strategies. A potential goldilocks mix of rising bond yields and lower inflation, could see investors warm to debt again after more than a decade of low interest rates. Lower pricing and higher yields could prove appealing to investors if we enter a reces- sion as predicted, but other fixed income markets could also become more attractive, such as private credit and infrastructure debt. However, investors need to be cautious as interest coverage ratios have fallen among some issuers. In this month’s cover story, we look at what investors need to consider and where value could be found. Read our take on the asset class that could support portfolios during a deep recession from page 18.
Another issue for investors to consider is the deterioration of liquidity as central banks continue to tighten. Fund flows suggest institutional investors are focusing on building a cash buffer. Read our take on this issue from page 34. One theme that could also catch investors’ attention due to the diversity of opportunity and the potential yield on offer is food. We do not produce enough calories and those available have probably damaged the climate and contributed to biodiversity loss on its journey from garden folk to dinning folk. With the population growing there is an opportunity for investors to improve traditional businesses or back the development of new technologies. We look at the options from page 28.
The outlook for 2023 is troubling. One asset class that could buck the global trend and perform strongly in the year ahead is Japanese equities. Solid corporate earnings, the end of Covid restrictions and attractive valuations look set to benefit investors. But could a new policy by the Bank of Japan alter the positive eco- nomic picture? We take a look from page 38. We also talk to the chief investment officer of New York City’s five public sector pension schemes about the value of long-term thinking, ESG and a tumultuous 2022. Finally, London CIV’s Jacqueline Jackson explains why being an artist is a benefit and discusses her plan to tackle a shocking statistic.
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk
Issue 120 | February 2023 | portfolio institutional | 3
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