Institutions put European high yield in the spotlight

Survey1Valuations and default rates are reasons why many institutional investors find European high yield bonds attractive, a survey indicates. A little over half of 103 institutions expected allocations to European high yield debt to increase over the next three years. Just over a quarter of the institutions rated Eurozone valuations as strong or very strong, the survey from NN Investment Partners shows, while the US was cited by 22%, the UK and Japan by 18% each, and Asia ex-Japan by 16% of the investors. Valuations were the most attractive attribute of European high yield bonds overall and justified the additional risk, according to survey respondents. Falling default rates in Europe were also supportive. Sjors Haverkamp, head of European high yield at NN Investment Partners, says: “Credit spreads widened from May after risk aversion increased. However, they are still above what would be considered normal in the current cycle so some value may therefore appear in spread products.” Haverkamp adds that investors will want to see fundamentals improve, too, and that European Central Bank monetary policy will “no doubt be supportive”. However, not all investors agreed that European high yield would be bought into. Just under 20% said they expected allocations to European high yield debt by institutions to decrease. ©2015 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.