In an era when investors are continually on the lookout for improved returns, a recent study by Aeon Investments has revealed a significant shift in the mindset of institutional fixed income investors.
The London-based credit-focused investment company's research, surveying pension funds, insurance asset managers, family offices, and wealth managers collectively handling assets of about $544 billion, found that a robust 84% of institutional fixed income investors are ready to embrace higher levels of risk in the upcoming year, with 10% preparing for substantial increases in their risk profiles.
This trend is not just a passing phase. Over the next three years, the appetite for risk seems to be growing even stronger. Around 38% of the investors surveyed anticipate making considerable increases to their risk, while 44% are looking at slight increases. Despite the move towards riskier portfolios, a cautious group remains, with 17% planning to maintain their current risk levels and a tiny fraction, 1%, suggesting dramatic decreases.
The survey underscores a critical shift in the way these investors are considering their credit and fixed income allocations. Presently, over a third believe their weighting in their local country market is appropriate. However, the global perspective is changing rapidly, with 88% of respondents planning for a more international allocation in their fixed income portfolios within three years. Of those, 35% are looking at significant increases in overseas exposure.
While the pivot towards global markets indicates a quest for diversified and potentially lucrative returns, alignment with liquidity budgets remains a delicate issue. A significant 24% of respondents stated their credit investments are 'much more illiquid' than their fund's liquidity budgets allow, a factor that could complicate the risk balancing act.
![Global expansion on the cards for fixed income investors seeking higher returns](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1655270918/Investor%20Daily/media/market_graph_id.jpg)
Aeon Investments' Head of Portfolio Management, Khalid Khan, provided insights into the research findings, highlighting the benefits of global diversification. "Increasing global fixed income allocations maximises diversification across all markets and issuers, and can have a positive influence on the portfolio’s risk-return profile. The same is true of incorporating a broad range of asset classes and sectors." Khan further advised investors on the importance of partnering with adept management, noting, "Investors should seek a manager that offers experience and demonstrable track record across the fixed income spectrum."
As institutional investors recalibrate their strategies to incorporate global fixed income opportunities, it's clear that a shift toward a more adventurous yet potentially rewarding approach is on the horizon, signaling a dynamic time ahead for the financial markets.
![Diversify AI investments beyond Nvidia for long-term wealth, says deVere Group CEO](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1718667251/pexels-fauxels-3184358_hchzav.jpg)
Investment insights
Diversify AI investments beyond Nvidia for long-term wealth, says deVere Group CEO
Investors should look beyond AI giants like Nvidia and diversify their investments across the wider AI ecosystem to build long-term wealth, according to Nigel Green, CEO of financial advisory and ...Read more
![Disappointment over Apple's AI plans and political uncertainty in France weigh on markets](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1718150782/pexels-pavel-danilyuk-8438918_f6lzgc.jpg)
Investment insights
Disappointment over Apple's AI plans and political uncertainty in France weigh on markets
Investors were left unimpressed by Apple's revelations about its artificial intelligence (AI) plans at the company's Worldwide Developer Conference yesterday. Despite details about a partnership with ...Read more
![The future of investment: Trends shaping Australia in 2024](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1715633406/pexels-goumbik-590011_ew3ldx.jpg)
Investment insights
The future of investment: Trends shaping Australia in 2024
As we look towards 2024, the Australian investment landscape is poised to undergo significant transformations driven by technological advancements, economic shifts, and evolving consumer behaviorsRead more
![Market rally faces next test as Nvidia earnings loom amid inflation debate](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1716242479/pexels-jord-343239_gitpvi.jpg)
Investment insights
Market rally faces next test as Nvidia earnings loom amid inflation debate
Equity markets around the world celebrated last week after softer-than-expected US inflation data fueled hopes of interest rate cuts, but questions remain over whether the rally can be sustained as ...Read more
![Fed doves cheered by soft US jobs data, but inflation concerns linger](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1715026638/pexels-nappy-935979_1_ykxjgr.jpg)
Investment insights
Fed doves cheered by soft US jobs data, but inflation concerns linger
Friday's US jobs data brightened the mood among Federal Reserve (Fed) doves, as the nonfarm payrolls (NFP), unemployment rate, and wages all pointed to a slowing labour market in April, according to ...Read more
![Fed rate cut expectations in doubt as inflation concerns persist](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1715025914/pexels-rdne-7414005_bzjbwm.jpg)
Investment insights
Fed rate cut expectations in doubt as inflation concerns persist
Investors are bracing for a less-than-cheerful Federal Reserve (Fed) monetary policy decision later today, as the central bank grapples with three straight months of rising inflation, which may force ...Read more
![Centuria announces senior internal promotions, strengthening leadership team for new property growth cycle](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1712887688/Andrew_Essey_Centuria_Chief_Investment_Officer_knbzzg.jpg)
Investment insights
Centuria announces senior internal promotions, strengthening leadership team for new property growth cycle
Centuria Capital Group (ASX: CNI or "Centuria") has strengthened its senior management structure with several internal promotions, effective from Monday, 15 April 2024. The new senior roles are part ...Read more
![Institutions and wealth managers favour fixed income over equities, research shows](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/v1712828744/pexels-tima-miroshnichenko-6694543_1_ays03l.jpg)
Investment insights
Institutions and wealth managers favour fixed income over equities, research shows
New research from Managing Partners Group (MPG), the international fund management group, shows professional investors believe fixed income is becoming more attractive than equities over the next 12 ...Read more