Increasing interest rates/rising inflation major fixed income concerns for institutional investors

Eighty-five per cent of institutional investors are concerned about further rises in interest rates in the fixed income market, with 80 per cent also worried about rising inflation.

As reported by our sister title, Insurance Asset Management, new research from Aeon Investments has revealed that one in three (35 per cent) are ‘very concerned’ about further rises in interest rates, and 30 per cent said they are ‘very concerned’ about rising inflation.

Furthermore, 77 per cent are ‘very concerned’ about central banks tightening policies and 27 per cent said they are ‘concerned’ about this.

Some 76 per cent said they are concerned about poor yields on many traditional fixed income assets (28 per cent are very concerned), and 75 per cent said this about their falling valuations (22 per cent said they are very concerned about this).

When it comes to official forecasts about inflation, 55 per cent of professional investors believe US figures will be higher than the current Federal Reserve forecasts and 49 per cent said this about the Bank of England’s inflation predictions.

Aeon Investments managing director Evgeny van der Geest said: “Many investors are reallocating fixed income investments to other asset classes that either provide the potential for capital growth or are expected to produce a more attractive yield on a risk-adjusted basis.

"We are certainly seeing a significant increase in enquiries from investors for opportunities in structured credit.”

Aeon Investments commissioned the market research company Pureprofile to interview 100 institutional investors across the UK, USA, Germany, Italy, Norway, Denmark, Finland, Sweden and Switzerland. The survey was conducted online in May 2022.

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