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Alternative Market Briefing

Institutional investors eye risks in fixed income

Friday, July 29, 2022

Bailey McCann, Opalesque New York:

New research from London-based credit-focused investment company Aeon Investments suggests that institutional investors are growing concerned about allocations to traditional fixed income. Further interest rate rises combined with rising inflation were cited as the top two risks, according to Aeon's survey of institutional investors in the US and Europe.

The survey includes responses from 100 institutional investors across the UK, USA, Germany, Italy, Norway, Denmark, Finland, Sweden and Switzerland.

85% of respondents said they were concerned about further interest rate increases and just over 35% said they were 'very concerned'. 80% said they were concerned about rising inflation. Central banks cutting back on quantitative easing came in as the third biggest issue with 77% saying they were concerned about the potential impacts.

When it comes to views on inflation, 55% of professional investors believe US figures will be higher than the current Federal Reserve forecasts. 49% said the same about the Bank of England's inflation predictions. 55% of survey respondents believe the European Central Bank's forecasts are too conservative.

The vast majority of investors in the survey anticipate that traditional fixed income will be under pressure for a significant amount of time. 76% said they were concerned about poor yields in many traditional fixed income assets and 75% said they were concerned about falling valu......................

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