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Pyramis Global Advisors Survey Reveals Surging Demand for Global Fixed-Income Strategies Amid Historically Low Yields
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By PR Newswire |
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December 6, 2012 09:31 AM EST |
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Home Market Bias on the Wane
Search for Yield Fueling Interest in Emerging Market Debt Strategies
SMITHFIELD, RHODE ISLAND and HONG KONG, PRC, Dec. 6, 2012 /CNW/ -
Forty-three percent of institutional investors worldwide will likely
increase exposure to global bond strategies in the coming years,
according to a Pyramis Global Advisors® survey of pension schemes and
other institutions from Europe, Asia and North America. These
respondents oversee more than USD$5 trillion in assets.
Yields in many developed markets are extremely low, causing
institutional investors from Europe to Asia to look beyond their home
markets for fixed-income strategies that can deliver higher yields. In
Europe, 38% of investors surveyed said they will likely increase
allocations to non-domestic fixed-income strategies. The trend is even
more pronounced in Asia, with 54% of investors indicating plans to
increase exposure to non-domestic fixed-income strategies.
"With historically low yields in many safe haven bond markets and
increased credit risk in a number of European countries, it is not
surprising that many institutional investors are beginning to look
beyond their borders," said Charlie Morrison, president of Fixed
Income.
Growing Demand for Emerging Market Debt
Globally, 24% of investors surveyed said they will increase allocations
to emerging market debt (EMD) over the next few years.
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37% of Asian institutional investors plan to increase allocations to
hard currency EMD while 33% will likely increase exposure to local
currency EMD
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47% of European institutional investors plan to increase allocations to
local currency EMD, while 36% will likely increase exposure to hard
currency EMD
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11% of U.S. institutional investors plan to increase allocations to
local currency EMD while 13% will likely increase exposure to hard
currency EMD
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15% of Canadian investors will likely increase exposure to EMD.
"The trends for emerging market debt remain positive," said Tom Hense,
chief investment officer of the High Income division. "Attractive
yields and improving credit fundamentals are fueling investor demand in
these markets."
Currency and Derivatives Policies Evolving
The 2012 survey also indicated changing attitudes toward currency
hedging. Traditionally seen as a way to hedge risk, currency hedging is
now seen by many investors as a potential source of alpha as well. This
trend is most apparent in Asia, where 47%of investors surveyed view
currency as both an added risk to the portfolio and a potential source
of alpha. This view was also held by 30% of the investors surveyed in
Europe, followed by 24% of the respondents in Canada and 21% of the
survey participants in the U.S.
The use of derivatives, which fell out of favor after the financial
crisis in 2008, is once again on the rise. Sixty-four percent of all
investors surveyed allow their managers to use derivatives. Of those
surveyed, 47% use derivatives for downside protection, 43% use them to
tactically adjust beta exposure and 42% use them to lengthen duration.
About the survey
Pyramis Global Advisors conducted a survey of institutional investors
during June and July 2012, including 632 investors in 16 countries (193
U.S. corporate pension plans, 109 U.S. government pension plans, 92
Canadian pension plans, 149 European and 89 Asian institutions,
including pensions, insurance companies and financial institutions).
Assets under management represented by respondents totaled more than $5
trillion USD. The surveys were executed in association with Asset International, Inc., in the U.S., the Canadian Institutional Investment Network in Canada,
and the Financial Times in Europe and Asia. Institutional executives responded to an online
questionnaire or telephone inquiry. A report on the survey is available
at www.pyramis.com
About Pyramis Global Advisors
Pyramis Global Advisors, a Fidelity Investments company, delivers asset
management products and services designed to meet the needs of
institutional investors around the world. Pyramis is a multi-asset
class manager with extensive experience managing investments for, and
serving the needs of, some of the world's largest corporate and public
defined benefit and defined contribution plans, endowments and
foundations, insurance companies, and financial institutions. The firm
offers traditional long-only and alternative equity, as well as fixed
income and real estate debt and REIT investment strategies. As of
September 30, 2012, assets under management totaled more than $190
billion USD. Headquartered in Smithfield, RI, USA, Pyramis offices are
located in Boston, Toronto, Montreal, London and Hong Kong.
635512.1.0
© 2012 FMR LLC. All rights reserved.
SOURCE Pyramis Global Advisors Image with caption: "Investors Planning To Increase Exposure To Emerging Market Debt In The Next 1-2 Years (CNW Group/Pyramis Global Advisors)". Image available at: http://photos.newswire.ca/images/download/20121206_C6727_PHOTO_EN_21625.jpg Image with caption: "Investors Who View Currency As Both An Added Risk And A Potential Source Of Alpha In A Portfolio (CNW Group/Pyramis Global Advisors)". Image available at: http://photos.newswire.ca/images/download/20121206_C6727_PHOTO_EN_21626.jpg
Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
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