Research from new ETF providers Tabula Investment Management reveals that over the next 24 months, when considering a range of fixed income and debt investment vehicles, those linked to credit and inflation will see the biggest increase in demand from investors.
Investors highlighted investment grade credit where 42 per cent of those interviewed expect demand to increase compared to 10 per cent who think it will fall.
Some 48 per cent of institutional investors and wealth managers interviewed expect demand for inflation strategies to increase between now and 2020, and just 2 per cent anticipate a fall, according to the research.
The findings from Tabula reveal other fixed income/debt strategies that investors expect to see a net increase in demand over the next two years include high yield credit, emerging market debt and asset backed securities. Demand for government bonds will remain relatively flat.
Michael John (‘MJ’) Lytle (pictured), Chief Executive, Tabula Investment Management says: “Our findings reflect investors increasing focus on the impact of inflation and for signs that it’s going to pick up. Many are beginning to make changes to their portfolios in preparation for this.
“Increased demand for investment grade credit reflects investors’ continued search for yield, and difference between implied and realised default rates. The implied default rates are the yields on the securities which are there to compensated investors for the credit risk of the issuer. Today’s yields far outstrip the actual (realised) default rates over the last forty years.
“Our findings also highlight the growing demand for a wider range of fixed income and debt investment products, which we plan to capitalise on with our range of ETFs that we plan to start launching soon.”
