The FSA Spy market buzz – 6 September 2024
Machine learning Chinese investment, BlackRock’s AI patience, Time Magazine’s AI cover, happier staff equal better returns, do wealth managers add value? sexy legs and much more.
Rising inflation and escalating geopolitical tensions in Ukraine are likely to send fixed investors running for the cover provided by short duration and high-quality government and corporate bonds.
Many analysts expect the US Federal Reserve to raise interest rates several times this year, with futures markets indicating a high probability of at least six rate hikes, according to RBC Wealth Management.
However, perhaps the markets are over-gloomy. As RBC WM argues, “it’s critical for investors to remember that the impetus for tightening comes from the success of the fiscal and monetary response to Covid-19; with significant fiscal tightening on the way in 2022 and the likely normalisation of supply chains later this year, we believe the Fed will be able to move at a more measured pace”.
The bank thinks that investors with a longer-term perspective, and the appropriate risk tolerance and liquidity profile, can use this uncertainty to allocate to longer-maturity government bonds and additional credit risk in their fixed income allocation.
Amundi, on the other hand, recommends “flexibility and a short duration bias”. The French asset manager identifies opportunities across yield curves and geographies and in higher-yielding assets such as emerging market bonds, which “will be crucial to extracting additional value in a negative real yield environment”.
FSA asked Isaac Poole, global chief investment officer, Oreana Portfolio Advisory Service, to select and compare two investment grade fixed income products: the Invesco Global Investment Grade Corporate Bond Fund and the Pimco GIS Global Investment Grade Credit Fund.
Invesco | Pimco | |
Size | $1.94bn | $16.1bn |
Inception | 2009 | 2008 |
Managers | Lyndon Man, Luke Greenwood | Mark Kiesel, Mohit Mittal, Jelle Brons |
Three-year cumulative return | 12.14% | 6.75% |
Three-year annualised return | 4.08% | 2.33% |
Three-year annualised alpha | 0.26 | -1.90 |
Three-year annualised volatility | 6.73% | 7.24% |
Three-year information ratio | 0.40 | -0.18 |
Morningstar star rating | **** | ** |
Morningstar analyst rating | Neutral | Neutral |
FE Crown fund rating | *** | ** |
OCF (retail share class) | 1.02% | 1.39% |
Machine learning Chinese investment, BlackRock’s AI patience, Time Magazine’s AI cover, happier staff equal better returns, do wealth managers add value? sexy legs and much more.
Part of the Mark Allen Group.