XxX | Feature Contents Editorial
FALLEN ANGELS
If you want to understand the extent to which Covid has damaged the globle economy, consider Kraft Heinz, Marks & Spencer, Next and ITV.
All are household names, but rating agencies now consider them to be less likely to re-pay their debts than they were before the crisis. Yes, Kraft Heinz, whose tins of beans and bottles of ketchup can be found in kitchen cupboards across the world, entered the junk bond universe earlier this year. This is one of a growing number of businesses which were once considered to be a quality company with an investment-grade credit rating to prove it, but now they have been downgraded to junk bonds, turning them into fallen angels. Happy days if you are a fixed income investor looking to pick up a few bargains and have confidence that pricing power will see such companies through this difficult period. But these companies have been downgraded for a reason, so how are investors navigat- ing such a risky area of the fixed income universe?
Our cover story this month takes a closer look at how to approach the growing fallen angel universe. You can read our coverage from page 20. Elsewhere, it could be argued that one of the biggest issues for investors when it comes to sustainability is not climate change, gender inequality or human rights, but identify- ing and measuring the impact that companies are having on such issues. The level of corporate disclosures has some way to go to help investors separate the businesses making a positive impact on the world from those who are just talking about it. Our four-page examination of how the issue is progressing starts on page 28. Also in this issue, we look at how private capital should be used to improve and repair the Western world’s crumbling and outdated infrastructure. Re-building economies once Covid’s hold over the world has ended is an opportunity to build back better, to borrow a political slogan from both sides of the Atlantic. You can find out how from page 46. Finally, The People’s Pension’s head of investment, Nico Aspinall, tells us about how he is managing a portfolio of assets that has almost doubled in size within two years and shares his thoughts on how the defined contribution market could look in the coming years. Nico speaks from page 14. That’s it for this issue, but we are already working on December-January 2021, where we will be celebrating our 10-year anniversary.
Stay safe.
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk Issue 98 | November 2020 | portfolio institutional | 3
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