New Study Shows Canadian Institutional Investors Embracing New Areas of Fixed Income in their Portfolios
May 24 2022 - 4:30PM
A new study conducted recently by Coalition Greenwich and
commissioned by AGF Investments found that Canadian institutional
investors remain deeply committed to having fixed income assets in
their portfolios, but recognize a need to diversify beyond
government and investment-grade corporate bonds to less traditional
sources of yield that offer the potential of higher returns.
“It’s important for us to continue hearing directly
from institutional investors about their appetite for fixed income
investments,” said Karrie Van Belle, Chief Marketing &
Innovation Officer, AGF Investments. “Not surprisingly in today’s
low interest rate environment, greater emphasis is being placed on
higher-yielding assets like private credit and strategies that
allocate beyond government and investment-grade corporate bonds
toward high-yield and EM debt.”
“At AGF, we remain committed to ensuring our
institutional offerings align with investor preferences and provide
access to the asset classes and strategies that meet their evolving
needs,” Van Belle added.
Results from the Coalition Greenwich 2022 Fixed
Income Investing Study (read the accompanying Whitepaper here)
showed that asset owners continue to look to fixed income
investments to manage volatility (67-88%), diversify away from
equities (67-74%) and preserve capital (50-65%).
But the findings also show that, in a time of low
interest rates, more emphasis is being placed on higher-yielding
assets like private credit and strategies that allocate beyond
government and investment-grade corporate bonds toward high-yield
and EM debt.
Given the choice of several options known to
provide higher potential yields, the majority (52%) of respondents
cited core plus strategies that typically invest in a mix of
government and investment-grade corporate bonds that are
complemented by smaller allocations to high-yield, global and EM
debt. Moreover, this preference is just as evident in the
relatively high percentage of responses mentioning both high yield
(32%) and EM debt (23%) more specifically.
Private credit is another highly sought-after
investment of institutions seeking more yield, in particular for
public and corporate pension plans. In fact, the study found that
42% of respondents prefer private credit for its higher yield and
the diversification it brings to a portfolio.
The study also showed that asset owners are
cognizant of the risks associated with higher-yielding assets and
are seeking out the most experienced and knowledgeable asset
managers to help them strike the right balance. When asked to rank
the most important attributes of a fixed income manager, team
composition & capabilities and length of track record are both
considered crucial to respondents, scoring 4.55 and 4.23 out of 5,
respectively.
To view more survey findings, read the AGF
Whitepaper.
Methodology
Coalition Greenwich conducted 31 telephone
interviews targeting corporate pensions, public pensions, and
endowments and foundations based in Canada to examine investors’
evolving sentiment toward fixed income investments and current
thinking about portfolio implementation. The interviews took place
during February and March of 2022. The study that this report is
based on was commissioned by AGF Investments and conducted by
Coalition Greenwich, a division of CRISIL.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an
independent and globally diverse asset management firm. AGF brings
a disciplined approach to delivering excellence in investment
management through its fundamental, quantitative, alternative and
high-net-worth businesses focused on providing an exceptional
client experience. AGF’s suite of investment solutions extends
globally to a wide range of clients, from financial advisors and
individual investors to institutional investors including pension
plans, corporate plans, sovereign wealth funds and endowments and
foundations.
AGF has investment operations and client servicing
teams on the ground in North America, Europe and Asia. With over
$40 billion in total assets under management and fee-earning
assets, AGF serves more than 800,000 investors. AGF trades on the
Toronto Stock Exchange under the symbol AGF.B.
AGF Investments is a group of wholly owned
subsidiaries of AGF Management Limited, a Canadian reporting
issuer. The subsidiaries included in AGF Investments are AGF
Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF
Investments LLC (AGFUS) and AGF International Advisors Company
Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S.
AGFI is registered as a portfolio manager across Canadian
securities commissions. AGFIA is regulated by the Central Bank of
Ireland and registered with the Australian Securities &
Investments Commission. The subsidiaries that form AGF Investments
manage a variety of mandates comprised of equity, fixed income and
balanced assets.
Media Contact
Amanda MarchmentDirector,
Corporate Communications416-865-4160amanda.marchment@agf.com
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