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Study finds fixed income managers need greater skills today

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The challenges facing bond managers are greater now than they were a decade ago according to new institutional research conducted by NN Investment Partners. 

Its research reveals that 61 per cent of institutional investors believe asset managers must address changing levels of liquidity better than they did ten years ago, while 42 per cent said they have to be able understand and invest in wider geographies better than they did then. Other challenges cited that require greater attention included the ability to invest across wider credit ratings (39 per cent) and managing overload (30 per cent).
 
Risk control was the most attractive quality in the process of a fixed income strategy at 57 per cent, followed by a focus on controlling duration and matching liabilities (39 per cent), the flexibility to invest in a wide range of investments (35 per cent) and a focus on avoiding defaults (31 per cent).
 
Sylvain de Ruijter, Head of Global Fixed Income at NN Investment Partners, says: “Markets are in a very different place from where they were ten years ago. Changes in global conditions, economic policies and financial markets have forced investors to adapt, and being able to adapt quickly will become an even more important skill.”
 
“Our research highlights that investors fully appreciate the difficulties in securing returns while managing risk. The new reality is that active management has changed, and investors recognise that they have to be prudent about partnering with the right asset managers.”
 
While yield challenges remain, NN Investment Partners believes that there are still fixed interest opportunities without investors having to ramp up risk levels.  The firm writes: “Institutional investors will benefit from a partnership with fixed income experts who have a proven track record of identifying opportunity in adversity and translating that into returns. Indeed, NN Investment Partners’ investment process is based on detailed analysis of long- and medium-term fundamentals, aiming to provide its clients with consistently high yield.”

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