CC-BY-SA-2.0, FlickrPhoto: d26b73. What We Have Learned from the 2Q Earnings Season?
According to the US National Bureau of Economic Research – the arbiter of US recession dating – the economic recession associated with the great financial crisis ended in June 2009. Since then, trailing 12-month S&P 500 operating earnings per share (EPS) have more than doubled, up 115% from under USD 54 to USD 116. Proportional to the US earnings recovery, the S&P 500 price index increased by nearly 130% in the seven-year period ending 30 June, dwarfing the market gains in non-US developed and emerging markets.
Ultimately, equity markets in the Eurozone, the UK, Japan, and emerging markets have lagged the US over the past several years, since earnings in these regions failed to keep up with the V-shaped US profit recovery.
But as UBS AM experts say, after three consecutive quarters of year-over-year earnings declines, it is reasonable for investors to question whether the profit cycle – and the US bull market – has run its course.
Mark Haefele, Global Chief Investment Officer Wealth Management, and Jeremy Zirin, Head of Investment Strategy Wealth Management Americas, say their research “suggests that the recent profit slump is nearing its end. Rebounding corporate profits should drive further US equity market gains again. The second-quarter earnings season has supported this view.” They we note the following:
“Less worse” is a good start. S&P 500 EPS fell by 6% in the first quarter, the worst year-over-year decline since 3Q09. The second quarter looks better. Aggregate EPS is on track to be flat to down 2%. We expect this sequential earnings improvement to continue in the second half of the year as earnings start to grow again as early as this quarter.
Excluding energy, there was no profit “recession.” Most of the damage to US corporate profits in recent quarters occurred due to the collapse in energy sector earnings, which fell by over 80% in 2Q to mark the sixth straight quarter of year-over-year declines of 50% or more. The silver lining is that: 1) energy earnings now make up just 2% of S&P 500 profits compared to 11% at the end of 2014; and 2) excluding energy, S&P 500 profits have actually only declined in a single quarter (1Q16, by just 1%). Ex-energy, US earnings were up 2–3% in the second quarter.
Big-cap technology, big earnings beats: Overall, 73% of S&P 500 companies by market cap beat consensus estimates by an aggregate 3.5%. Some 83% of tech stocks exceeded consensus by an average of 7.4%. Accelerating revenue growth for mega-cap internet software companies has been propelling technology (the largest S&P 500 sector) shares into the third quarter.
“The corporate profit cycle in the US has stalled over the past few quarters, largely due to collapsing energy prices. The combination of a reasonably healthy US economy and easier quarterly comparisons in the energy sector should cause US earnings to grow again in the quarters ahead.” They conclude.
CC-BY-SA-2.0, FlickrPhoto: Dying Regime. Desjardins Global Asset Management chooses Mirova for Delegated Management of a Green Bond Fund
Mirova, an asset management company dedicated to responsible investment, got selected by Desjardins Global Asset Management to provide delegated management of an international green bond fund, the Desjardins SocieTerra Environmental Bond Fund, for a total of 100 million Canadian dollars.
The Desjardins SocieTerra Environmental Bond Fund puts the Global Green Bond strategy managed by Mirova into action. This fund will receive the recognized expertise of Mirova’s bond specialist teams, which are leaders in the area of green bonds.
Like Mirova’s Global Green Bond strategy, the Desjardins SocieTerra Environmental Bond Fund will be steered with active management and conviction management. The fund’s main performance driver will be investment in debt securities that support the environmental and energy transition, described as green bonds by Mirova’s responsible investment research team. As such, the management approach will combine financial and non-financial tactics: specific analysis of each project financed, Environmental Social Governance (ESG) analysis of the issuer, and fundamental analysis to determine the bond’s financial attractiveness. The fund will try to benefit from different international economic cycles by diversifying in terms of geography, economic sector, and credit rating.
The Desjardins SocieTerra Environmental Bond fund will be managed by Christopher Wigley, with Marc Briand, co-manager and head of fixed-Income at Mirova who will particularly rely on Mirova’s responsible investment research team of 12 analysts.
Philippe Zaouati, CEO of Mirova, commented on the announcement: “We are proud to have received this management mandate from Desjardins Global Asset Management. It is proof that our expertise in green-bond management is recognized on the market. Additionally, this mandate is part of our international growth strategy at Mirova, a strategy that is clearly beginning to pay off.”
Michel Lessard, Vice President of Desjardins Global Asset Management added: “By financing tangible assets, green bonds fill direct, concrete needs: they enable issuers to diversify their investor base and investors to actively participate in financing the energy transition. We are delighted, alongside Mirova, to commit to this energy transition by launching the Desjardins SocieTerra Environmental Bond Fund, the first green bond fund on the Canadian market.”
CC-BY-SA-2.0, FlickrPhoto: TreyRaatcliff, Flickr, Creative Commons. China Allows for Mutual Stock Market Access Between Shenzhen and Hong Kong
The China Securities Regulatory Commission (CSRC) and the Securities and Futures Commission (SFC) have approved the establishment of mutual stock market access between Shenzhen and Hong Kong (Shenzhen-Hong Kong Stock Connect) in order to promote the development of capital markets in both the Mainland China and Hong Kong. The organisms have also agreed to abolish the aggregate quota under Shanghai-Hong Kong Stock Connect.
The key features of Shenzhen-Hong Kong Stock Connect, including the shares eligible to be traded under the scheme, eligible investors and daily quotas, are set out in the joint announcement. HKEX expects it should take approximately four months from today to complete the preparations for the launch of the Shenzhen-Hong Kong Stock Connect.
“We are excited about Shenzhen-Hong Kong Stock Connect, which will open up another Mainland market for international investors and strengthen the Mainland’s links with Hong Kong,” said HKEX Chairman C K Chow.
“Under ‘One Country, Two Systems’, Hong Kong is in a unique position to build important connectivity with the Mainland markets and to facilitate the gradual opening of China’s capital account,” Mr Chow said. “This will further enhance Hong Kong as an international financial centre.”
“We look forward to launching Shenzhen-Hong Kong Stock Connect, which will be an extension of our successful mutual market access programme with Shanghai, so investors in our market and the Mainland market will have an additional secure, reliable channel for investment in the other market in an environment that they’re familiar with,” said HKEX Chief Executive Charles Li. “We also look forward to enhancing Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect with additional products in the future.
“We aim to build Hong Kong into a mature, comprehensive financial centre that can serve as an offshore wealth management centre for Mainland investors, an offshore pricing centre for the Renminbi and global asset classes for the Mainland, and an offshore comprehensive risk management centre for Mainland investors.”
CC-BY-SA-2.0, Flickr. Can Brazil Win a Gold Medal as an Investment?
With the Olympic Games underway, many eyes are on Rio. Coincidentally, investors this year are similarly directing more attention to Brazil, although it is developments in the capitol, Brasilia, that are likely of greater importance.
Brazil has had one of the best performing stock markets in the world this year. This may come as a surprise given the headlines we’ve seen this year coming from the country on everything from a presidential impeachment to the Zika virus. But according to Bloomberg data, the MSCI Brazil 25/50 Index is up more than 50% this year, while the MSCI Brazil Small Cap Index has risen over 60%.
The question now is, can the rally continue? My take is that it could potentially, but investors need to be willing to accept significant risk. Some economic bright spots
First the good news: After two years of a deep recession, the economic fundamentals of Brazil are showing signs of bottoming out. Industrial production has started to turn, and so have sentiment indicators, with business confidence indexes leading the way (source: Bloomberg). Particularly encouraging are the improvements in the inflation trend. Prices have been easing since early 2016 (source: Bloomberg), and the new central bank committee’s focus on bringing down inflation has also helped lower inflation expectations for the year ahead. This ongoing adjustment has raised expectations of monetary policy easing, namely interest rate cuts in the fourth quarter, which will be supportive of a recovery in economic activity.
Brazilian stocks climb as perception of risk declines
Political vulnerability and stalling reforms
That said, Brazil remains in a fragile situation. Economic imbalances such as weak fiscal accounts, high levels of debt and unemployment need to be addressed. The reforms needed to fix the Brazilian economy are complex and in many instances very unpopular with the public, making this a significant challenge for any government.
But it is political developments that continue to be the main variable in assessing the outlook for Brazil. Most important of these is the pending final vote on President Dilma Rousseff’s impeachment, which will likely happen in late August or early September.
In May, Interim President Michel Temer took office, after Rousseff stepped down to face an impeachment trial. Since then, Temer has had a few successes. In particular, his cabinet appointments were well received by both investors and politicians, which helped strengthen the relationship with Congress. This relationship has been and will be key for the cabinet ability to pass policy measures.
A vote to impeach Rousseff is likely to prompt an acceleration of much-needed reforms, such as cutting fiscal spending and revamping the pension system. Progress on policy changes, in turn, may go a long way towards restoring confidence of both consumers and investors. Nevertheless, while many believe the Senate would follow through with Rousseff’s impeachment, we cannot rule out the opposite outcome, which would likely be adverse for risk assets especially given high market expectations. Adding to the already high political uncertainty: the ongoing corruption and money laundering investigations surrounding the country’s largest oil and gas company.
And there’s the rub: Given the sharp rise in the markets this year it seems that investors are making a bet on the best case scenario. Should that fall through, markets are likely to correct, perhaps sharply.
Things to look for
In short, investors in Brazil have already won a gold medal of sorts this year. Winning another medal will likely require a more prosaic path: a recovery of earnings on the back of the economic turnaround and effective execution on the reform front.
Investors interested in Brazil may want to consider the iShares MSCI Brazil Capped ETF (EWZ) or the iShares MSCI Brazil Small-Cap ETF (EWZS).
Build on Insight, by BlackRock written by Heidi Richardson.
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This material represents an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.
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CC-BY-SA-2.0, FlickrPhoto: John Rudoff. What is the Millennials’ Impact on the Economy?
Most of us follow the same life cycle. We start out as children, then we become young single adults. We pass from student to working life, form couples, become parents, grands-parents and then retirees. At each of these stages, our financial behaviour evolves and adjusts to our needs of the moment. And when a large group of individuals undergoes these same shifts at the same time, the economy is affected. This is the case of certain generations that have brought about major changes in the global economy.
Generally speaking, says Fabien Benchetrit, senior portfolio manager at BNP Paribas, a generation is a sub-population whose members are more or less the same age or who have lived at the same time, and who thereby have had many common experiences. However, some experts take another approach to this and extend the baby-boom generation to persons born in the United States between 1935 and 1961, as seen in the graph below from the trough to peak.
Exhibit 1: This highlights the evolution of US births in millons
The baby-boom generation of 105 million individuals (not counting immigrants) according to the Census Bureau, had a major impact on the United States, which was unable to adjust supply to demand. For example, the job market was sluggish, with unemployment rising from 3.50% at end-1969 to 8.2% at end-1975. Likewise, the real-estate market underwent a boom until the 2000s, driven by all of those baby-boomers simultaneously buying property.
American families’ expenditures peak when the parents are on average 46 years old. In general, couples have their first child between 28 and 33. When their first child goes to university at age 18, parents’ expenses often spike, with tuition, room, board and related expenses. “The impact of baby-boomers’ heavier spending is visible in various economic indicators. The graph below highlights a close correlation between US equity market capitalisation (adjusted for the expansion in the Fed’s balance sheet) and baby-boomers that are 46 years old.” The expert writes in the company’s blog.
Exhibit 2: This graph shows how US births shifted and US market capitalisation occured
While demographics clearly affect the economy, there are other major factors involved, such as legislation, government policy, monetary policy, wars and geographical tensions, etc.
And, now, another generation that is just as important is emerging – millennials. Based on the same broad definition of a generation, millennials are individuals born in the US between 1976 and 2010 – a period of 34 years. So this generation of 136 million individuals (excluding immigrants) is actually larger than the baby-boom generation. This is also the first “digital” generation, i.e., born with the Internet. They trust social media more (e.g. Facebook, Tweeter, Instagram etc.) than they do companies. Their lives, in fact, revolve around social media.” Says Benchetrit.
“However, millennials’ impact on the economy is different from that seen with the baby-boomers. For one thing, they are a smaller portion of the population. While baby-boomers accounted for up to 57% of the US population US (in 1960), millennials made up 43% in 2014. In addition, they were born over a longer period than the baby-boomers were.” Says Benchetrit.
Millennials born before the first peak of births in 1990 have now completed their studies and started working. They are now numerous enough to affect the economy but conditions have not been in their favour. They arrived on the job market, carrying debt, in the midst of the subprime crisis in 2008. The US economy was resilient enough for them to find jobs, but those jobs were less well-paid and delayed their financial autonomy. In 2015, for the first time since 1960, 31.6% of young people aged 18 to 34 still lived with their parents.
Exhibit 3: This demonstrates the number of young adults (18-34 years of age) living with their parents
The behaviour of baby-boomers and millennials is having a clear impact on the economy. Nevertheless, financial markets are currently trading in a “demographic dip” between the baby-boomers, who are reducing their expenditure, and the millennials, who are not numerous enough to have reached their prime spending years.
“A better understanding of each of these generations’ behaviour will allow asset managers to create value, for example, by focusing on healthcare and pharmaceuticals as US baby-boomers get older.” He explains.
According to the blog, the managers could also try to identify new countries that have the same features as the United States at the start of the 1960s, i.e., those undergoing urbanisation and lightly indebted countries with economic growth similar to what the baby-boomers experienced and a population consisting of a high proportion of young, skilled workers who have put some money aside.
CC-BY-SA-2.0, FlickrPhoto: _TC Photography_
. Hedge Fund Managers See Opportunities in Europe
Preqin’s Q2 update on the hedge fund industry finds that economic uncertainty following the UK vote to leave the EU has created potential opportunities for hedge fund managers and, as a result, many more funds have launched focused on the region. Europe-focused hedge funds saw a large increase in the proportion of overall fund launches, rising from 1% of funds launched in Q1 to 16% of those incepted in Q2.
At the same time, UCITS-compliant funds accounted for 18% of overall fund inceptions through Q2, the highest quarterly proportion tracked by Preqin since the directive came into force. Given that UCITS funds are a key way for non-European firms to raise capital from Europe-based investors, it is a further sign of the growing interest that industry participants are taking in the region.
While long/short equity hedge funds remain the most common hedge fund vehicles in terms of both investor searches and new fund launches, CTA funds are being increasingly sought-after by investors. The proportion of fund searches issued in Q2 that specified CTA or managed futures funds was 22%, twice the proportion of fund searches issued in Q1. Despite this growing appetite among investors for the fund type, just 3% of new hedge fund launches through the quarter were for CTA vehicles, less than the proportion seen for UCITS vehicles (18%) or funds of hedge funds (7%).
Other Key Q2 Hedge Fund Launches and Searches Facts:
Launches by Strategy: Equity strategies remained the most common approach among new funds launched in Q2, representing 53%. The proportion of funds using a credit strategy rose from 10% of Q1 launches to 18% in Q2, while multi-strategy launches fell from 19% to 6% in the same period.
Fund Manager Location: North America-based fund managers launched two-thirds of all new hedge funds in Q2. There was also an increase in the proportion of vehicles launched by Europe-based firms, representing 28% of all launches, while Asia-Pacific-based managers represented 3% of fund launches.
Investor Type: Fund of hedge fund managers issued the largest proportion (18%) of fund searches in Q2, while wealth managers (17%) and private sector pension funds (12%) also accounted for notable proportions. After some high-profile redemptions, public pension funds comprised 6% of fund searches in Q2.
Searches by Region: Geographically, the proportion of fund searches has remained similar to Q1. Investors in the more developed markets of North America (40%) and Europe (45%) represented the majority of fund searches, while Asia-Pacific based investors comprised 7% of searches.
According to Amy Bensted, Head of Hedge Fund Products at Preqin, “the run-up to and aftermath of the UK’s decision to leave the EU caused volatility across several markets within Europe and beyond. Hedge fund managers have seen increased opportunities to capitalise on this turbulence, and more Europe-focused hedge funds have been launched by managers both in and outside the region. Although Europe-focused funds did not make the same gains as North America-or Asia-Pacific-focused vehicles in Q2, the ongoing volatility arising out of the uncertainty within Europe may provide opportunities for hedge funds focusing on the region to deliver some upside gains. More broadly, the appetite among investors for managed futures continues to grow, as investors seek products which can diversify their portfolio and add some downside protection over the coming months. Although these funds have seen some volatility in their returns over recent months, CTAs have performed more consistently in Q2 2016, and fund managers will be keen to show investors that they can offer uncorrelated returns and capital protection.”
CC-BY-SA-2.0, FlickrPhoto: Ainhoa Sanchez . Hedge Funds and Private Equity Managers Show a Growing Interest in ESG
Unigestion, a boutique asset manager with scale that focuses on guiding its clients with risk-managed investment solutions, has again surveyed the hedge fund and private equity managers it invests in to track their attitudes to ESG.
The survey showed that more hedge funds are considering the value of ESG, as last year 60% of hedge fund managers were ‘reluctant’ to consider ESG as part of their strategies, whilst this year only 53% of hedge fund managers were in the ‘no interest’ category1. 30% of hedge funds managers surveyed were actively incorporating ESG into their strategies.
Whilst there were a number of strategies represented in this sample, the clear leaders in ESG adoption were Arbitrage managers – 67% of which had an active ESG strategy. Tactical traders (including commodities, managed futures and global macro strategies) find it the most difficult to implement ESG into their investment processes because of the nature of the strategy
One of the managers surveyed, Winton Capital, explained that its approach to ESG encompasses broad initiatives such as sponsoring research prizes. In addition, its headquarters are a certified Low Carbon Workplace, one of only 8 in the UK.
Small and large firms also diverged in their approach to ESG. Whilst the survey showed that large firms are more likely to have in place a formal ESG policy than smaller firms, there are again exceptions. Arrowgrass Capital Partners has USD 5.9bn under management and has a strong ESG policy having partnered with an ESG data provider and a responsible investment consultant, and having its CEO and other members of the senior executive sitting on its ESG committee.
The survey also showed more hedge funds are becoming signatories to the PRI. Last year only 13% of hedge funds surveyed were signed up to the principles, whilst this year 20% had signed up.
As the practicalities of incorporating ESG into investment strategies is still a stumbling block for many managers, the PRI is spearheading a working group to create a standard ESG due diligence questionnaire for hedge funds.
Private equity managers are on the whole more advanced than their hedge fund counterparts in ESG adoption, and Unigestion has also seen a larger year on year improvement in this asset class. This year, 42% of private equity managers achieved ‘advanced’ or ‘leader’ status (up from 29% last year) and the proportion of ‘reluctant’ managers fell from 27% to 21%.
Eric Cockshutt, Responsible Investment Coordinator at Unigestion, said: “We are still seeing too many hedge fund and private equity managers dismissing ESG as a cost burden, incompatible with their strategies, or a mere marketing exercise. The experience of many managers however is that ESG adoption is both feasible and beneficial to clients and the company’s overall reputation for taking seriously its environmental and social responsibilities.
Photo: Mortime, Flickr, Creative Commons. Standard Life Investments Launched the Enhanced Diversification Multi-Asset SICAV
Standard Life Investments launched the Enhanced Diversification Multi-Asset (EDMA) SICAV on July, 20th, 2016 in response to a growing client demand for multi-asset funds that manage downside risk.
According to a press release, “EDMA is part of our multi-asset range for investors who want to balance capital growth against volatility in financial markets. With EDMA, we aim to generate equity-like returns over the medium term with less volatility.” EDMA targets equity-type returns over the market cycle (typically five to seven years in duration) but with only two-thirds of equity market risk.
The Fund differs from many traditional diversified growth approaches. Standard Life Investments holds a range of market return investments (such as equities, bonds and listed real estate), however, they also use enhanced diversification strategies to provide additional sources of return and high levels of portfolio diversification.
“EDMA benefits from the expertise of our established and award-winning multi-asset investing team. By exploiting our resources and capabilities we believe we can offer enhanced, lower-risk performance that is cost-effective for our clients.” They conclude.
CC-BY-SA-2.0, FlickrPhoto: Foxspain, Flickr, Creative Commons. Nearly 16,000 Pass the Level III CFA Exam
CFA Institute, the global association of investment professionals that sets the highest standards of ethics, education, and professional excellence, announced that of 28,884 candidates who sat for the Level III CFA exam in June 2016, 54 percent passed the third and final exam. Pending experience and membership requirements, these successful candidates will become CFA charterholders starting in early October, and begin their journey as investment management professionals whose mission is to raise standards in the industry.
In addition, of 50,230 candidates who sat for the Level II exam in June 2016, 46 percent were successful and of 58,677 candidates who took the Level I exam, the pass rate was 43 percent. Globally, a total of 64,020 candidates passed Levels I, II and III, with the overall pass rate for all three levels at 46 percent. (View historical pass rates.)
“Congratulations to the successful candidates who have demonstrated their commitment to the highest standard of professional knowledge and ethics,” said Paul Smith, CFA, president and CEO of CFA Institute. “At CFA Institute, we aspire to develop future investment management professionals for the global financial markets. These candidates have taken the first step to earn the CFA designation and to join us in our pursuit to build professionalism, market integrity and a more trustworthy industry that puts clients’ interests above their own interests.”
To earn the CFA charter, candidates must pass all three levels of the exam which is considered to be the most rigorous exam in the investment profession; meet the work experience requirements of four years in the investment industry; sign a commitment to abide by the CFA Institute Code of Ethics and Standards of Professional Conduct; and become a member of CFA Institute.
“We applaud CFA Institute for its continued efforts to strengthen the professional and ethical foundations of our industry by upholding the highest standards in their certification process,” said Ronald P. O’Hanley, President and CEO of State Street Global Advisors, “and we congratulate all successful candidates. As an organization that is proud to partner with CFA Institute, we strongly encourage everyone to avail themselves of the many opportunities it provides for continuing education and certification to improve our industry and the quality of service and engagement for our clients.”
Successful candidates study approximately 1,000 hours on average to master 8,500 pages of curriculum. The CFA curriculum includes ethical and professional standards; financial reporting and analysis; corporate finance; economics; quantitative methods; equity, fixed income, alternative investments; derivatives; portfolio management; and wealth planning. Its depth and breadth provides a strong foundation of advanced investment analysis and practical portfolio management skills, which gives investment professionals a career advantage.
“The CFA designation is widely recognized as the gold standard of professional knowledge and business ethics in the investment industry,” said Yimei Li, CFA, Deputy CEO of China AMC. “We encourage and support our staff to pursue the CFA charter, as it demonstrates our commitment to our clients that we bring in the best talent to serve their needs.”
New candidates entering the CFA Program in this year’s exam cycle grew by 15 percent to 102,514 candidates, which reflects growing interest in building professionalism in the investment management industry. The growth has been strongest in Mainland China where Level I candidate registrations reached a record high of 22,999, surpassing the number of registrations in the United States for the first time.
The June 2016 Level I, II and III exams were administered in 258 test centers in 197 cities across 91 countries worldwide. The top 10 countries and territories with the largest number of candidates tested are the United States (31,501), Mainland China (26,758), India (12,117), Canada (11,136), United Kingdom (9,717), Hong Kong (5,359), Singapore (3,433), Australia (2,915), South Africa (2,006), and France (1,784).
CC-BY-SA-2.0, FlickrFoto: Hernán Piñeira. Los sectores bursátiles de infraestructuras, seguros o inmobiliario cotizan muy por encima de la media
Columbia Threadneedle Investments announces the introduction of the Threadneedle US Investment Grade Corporate Bond Fund to its SICAV range.
The UCITS fund, co-managed by Minneapolis-based portfolio managers Tom Murphy, CFA and Tim Doubek, CFA, aims to generate a total return from income and capital appreciation by seizing opportunities in the US investment grade corporate bond market, focusing on security selection and industry rotation as the primary sources of value added with a constant focus on downside risk.
The fund mirrors the existing investment grade corporate fixed income strategy managed by the duo for US investors with a strong track record over the last seven years. The fund’s benchmark is the Barclays US Corporate Investment Grade Index and the fund’s performance target is +100 to 150 bps over the index (gross) over a full market cycle of five to seven years.
The fund follows a rigorous, independent, bottom-up fundamental research process resulting in a deep understanding of issuer and industry dynamics. Experienced and dedicated portfolio managers and analysts are full partners in the portfolio construction and monitoring process allowing the team’s best ideas to emerge with a constant focus on maximized return and reduced volatility.
Initially registered in Luxembourg, the fund is intended for distribution across other markets (UK, Austria, Belgium, France, Germany, Italy, the Netherlands, Portugal, Singapore, Spain, Switzerland and Sweden) pending regulatory approval in each country.
Gary Collins, Head of Wholesale Distribution for EMEA and Latin America at Columbia Threadneedle Investments said: “In a low yield environment, exposure to corporate credit can provide an effective way for investors to preserve capital and generate income whilst diversifying their portfolio away from equity markets. Columbia Threadneedle manages c. US$24 billion in US investment grade and we also have successful European and Global investment grade corporate bond strategies available through our SICAV.”
Tom Murphy, CFA, Columbia Threadneedle’s Head of Investment Grade Credit and co-manager of the Fund, said: “Given solid fundamental credit insights, a reasonable time horizon, and the ability to withstand short-term volatility, we believe credit opportunities in the US investment grade corporate bond market can be exploited to achieve attractive risk-adjusted returns. Tim and I have close to 30 years’ experience each and a real focus on finding the best business models with the best management teams that offer solid relative value.”
