Unconstrained bond assets are on the rise, according to a new report from eVestment. The company’s Institutional Insights: Global Unconstrained Fixed Income Report reveals that across both retail and institutional accounts, assets under management in these strategies rose from USD153.2 billion in Q2 2013 to USD289.7 billion in Q2 2018, for a five-year compound annual growth rate of 13.6 per cent.
eVestment’s data suggests that European investors in particular are increasing their global unconstrained bond allocations which have grown steadily over the past five years, relative to investors residing in other areas of the world. European investors currently account for 43.1 per cent of total universe assets, up from 26.1 per cent in Q3 2013.
Given the rise in interest in these strategies among global and in particular European investors, eVestment’s research team took a deep dive into these strategies to highlight key trends in the space.
In addition to overall growth in AUM in these strategies and strong interest among European investors, the report finds that while European interest in unconstrained bond strategies is on the rise, U.S. domiciled investors saw their share of global unconstrained bond AUM decrease from 60.1 per cent in Q3 2013 to 44.4 per cent as of Q2 2018.
Reviews of unconstrained bond strategies among Asia-Pacific eVestment consultant and investor users meanwhile, show a fairly steady increase since 2013, while reviews from US-based eVestment users has steadily fallen since 2013, while among institutional investors, foundations and endowments had the greatest exposure to global unconstrained bond strategies as a percentage of their total global fixed income allocations.