Institutional investors have little confidence in their fixed income managers when it comes to dealing with the end of the credit cycle or coping with rising interest rates, a survey shows.
Only 3% have complete confidence in their managers – while 6% have no confidence at all.
The primary reason cited is that few managers have the experience of dealing with an environment like this, a survey by NN Investment Partners of 103 institutional investors finds.
Just over half (52%) said some managers will struggle in a tightening market, though 29% thought managers would generally be fine.
Many of the investors said fixed income managers would have to adopt a more flexible approach if they were to achieve a positive performance irrespective of the interest rate cycle.
Sylvain de Ruijter, head of global fixed income at NN Investment Partners, says: “The current environment is very different from the last US tightening cycle, given the long period of very low interest rates and extensive quantitative easing that we have seen. A Fed tightening cycle, if it comes, may well be very different from earlier cycles, something that few fund managers have experienced.”
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