Editorial


FIXED INCOME


CONTENTS P4 - 5: Fixed income


Our coverage on how bond investing is changing starts here.


Bond investing has traditionally been viewed as the boring relation of equities. There is not much excitement. With bonds, losing money is about as eventful as it can get, while those trading shares could earn or miss out on a fortune. But bond management is changing. Increasing cashflow negativity among defined benefit pensions schemes mixed with the Bank of England setting interest rates at 0.1% means fixed income managers are having to be more creative to generate the returns their clients’ need. Central banks have not helped. Their bond-buying programmes have caused uncertainty and inflated prices. So, investors are taking more risk at a time when spreads are tight.


Then there is inflation, of which we are told to expect more of in the com- ing months. This puts pressure on mature schemes which are approach- ing their endgame and are perhaps looking to entice an insurer to guar- antee all future benefits. The pandemic is another factor. The economic impact of Covid-19 has raised default fears, so the quality of an issuer is growing in importance. Bond managers are also having to show how their portfolios are making positive environmental and social impacts. It’s tough, as reporting here is described by some as “patchy”, but they still have to please investors and regulators alike. So, low rates, inflationary fears and pressure to build green portfolios means there is much for bond investors to navigate. It looks like fixed income will not be seen as the boring relative to equities for some time. Sounds like an ideal time to examine the market.


Mark Dunne Editor


m.dunne@portfolio-institutional.co.uk P6: Fixed income in figures A snapshot of the global fixed income market.


P7: Participants Introducing the experts who took part in our discussion.


P8 -15: Fixed income: The discussion Asset owners, asset managers and a consult- ant look at the main issues effecting the bond market.


P16 -17: Are inflation jitters justified? Janus Henderson’s Jim Cielinski assesses the rise in bond yields and inflation fears.


P18 - 21: Fixed income: it’s not about the money Warren Buffett says that fixed income has become bad news, but, as Andrew Holt dis- covers, for institutional investors there is more to bonds than income.


May 2021 portfolio institutional roundtable: Fixed income


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