Aberdeen Standard Investments expects lower returns from bonds over the coming few years due to reduced bond yields.
The fund manager is seeing “attractive opportunities” in a number of alternative and non-traditional asset classes such as social and renewable infrastructure, healthcare royalties and real asset leasing.
Investment director Sean Flanagan tells Funds Europe that the firm is comfortable with its relatively modest exposure to equities and has negligible exposure to traditional corporate credit.
“We therefore strongly believe that it is important to look further afield when building a portfolio that is set to perform well over the coming years,” he says.
“Local currency emerging market bonds have delivered strong performance over the past 12 months, both in the equity market sell-off in the fourth quarter of 2018 and in the equity market rally this year.
“Yields, and consequently expected returns, are lower but we still see the asset class as attractive, especially relative to the low returns available on cash and developed market bonds. Asset-backed securities continue to offer significant attractions both in absolute terms and relative to corporate bonds with significantly higher return prospects for similar levels of risk.”
*Find out more about how asset managers are positioning their multi-asset portfolios in our October magazine and here.
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