This edition of The Investors Journal provides thought leadership articles on key global asset management themes and potential investment solutions.
Introduction
- GLOBAL HIGH YIELD: REMOVING THE ALPHA HANDCUFFS
Todd Youngberg | Senior Vice President, Head of High Yield, Aviva Investors North America
Investors increasingly recognise the benefits of global approaches to mainstream asset classes. High yield bonds, however,
as a less-frequented asset class, are often approached on a piecemeal, regional basis. We argue that a global approach to high
yield offers improved potential for diversification and clear advantages for investors seeking a wider range of alpha sources.
- REAL RETURNS AND PORTFOLIO ALLOCATION
Dr. Jean-François Boulier | Chief Executive Officer, Aviva Investors, Europe
Denis Lehman | Head of Fixed Income funds, OPCVM funds, Aviva Investors - France
Inflation is a major threat to the future value of any investment and, as with any risk, preparing for it is an essential
part of sound portfolio management. In a previous article1 we discussed the characteristics of inflation-linked bonds and
how they can be used to manage inflation risk. The purpose of this paper is to analyse the effect of inflation on mainstream
asset classes, and consider approaches to asset allocation in the context of inflation.
- IS SHORT-TERMISM A PROBLEM IN INVESTING AND, IF SO, WHAT SHOULD BE DONE ABOUT IT?
Jane Fuller | Co-director of the Centre for the Study of Financial Innovation (CSFI), United Kingdom
As far as the EU is concerned, the answer to the question “Is short-termism a problem” is yes. Its green paper,
The EU Corporate Governance Framework1, refers to “inappropriate shorttermism among investors” as if it were universally
recognised as a fact. The UK’s Department for Business, Innovation and Skills (DBIS) has a similar assumption about the
viewpoint of boards of directors. Witness question one in its consultation, A Long-Term Focus for Corporate Britain2:
“Do UK boards have a long-term focus – if not, why not?”
- TAIL RISK MANAGEMENT: A PRACTICAL GUIDE TO IDENTIFYING AND QUANTIFYING RISKS
Dr Jo Simon Clyde | Head of Retirement LDI, Aviva Investors - United Kingdom
Tail risk management has been widely discussed in the financial press since the dramatic market events which started
in late-20071. However, whereas most articles have treated the topic with a singularly broad brush, ignoring the fact
that management of tail risks has a different meaning for almost every investor, in this article we address the more
fundamental question of how to identify and quantify tail risks. As our overall focus is on UK pension funds, we illustrate
the general framework by considering a simple pension fund example.
- EXTRACTING VALUE FROM INDEPENDENT FIXED INCOME ALPHA TEAMS USING DYNAMIC RISK BUDGETING
Daniel James | Head of Global Markets Alpha, Aviva Investors - United Kingdom
Traditionally, institutional investors have tended to see fixed income as a choice between sovereign and credit risk,
with little attention being paid to risk budgeting. However, there is a maltitude of other fixed income markets from
which we can actively source alpha utilising autonomous alpha generating teams with the requisite insight and skill.
Moreover, when these independent sources of return are combined through intelligent risk-budgeting, together with a
coherent beta replication strategy in a globally diversified fixed income portfolio, the risk-adjusted returns from
fixed income can be potentially enhanced.
- FIVE REGULATORY REFORMS THAT WILL CHANGE REAL ESTATE INVESTMENT
Chris Urwin | Global Research Analyst, Aviva Investors - United Kingdom
The next few years will see the introduction of five key pieces of legislation which will profoundly
change the way that stakeholders in the real estate investment market operate. Investors, fund managers,
insurers, banks and tenants will be faced with new demands from a rapidly evolving regulartory environment.