Insights

TEST


China, EM Come Online


Most institutions will maintain or increase Emerging Markets exposure, and China's entry into key indexes is a rich source of potential.


EMD FI Strategies: Active, Index, or Combination   In the EMD space, institutional investors are most likely to use a combined active/index strategy for the EMD segment of their fixed income portfolio.

38%

of the largest, most sophisticated investors say that having a dedicated China fixed income exposure is a high priority.


27%

overall intend to increase their China allocation with the next 3 years.


42%

will increase their allocation to EMD over the next 3 years.


ESG Moves Mainstream for Fixed Income


No longer only for Equity, ESG is coming for Fixed Income in a major way.


Planned Future ESG Integration in FI Portfolio, by Strategy   Many segments of institutional investors’ fixed income portfolios will be prioritized for deeper/more comprehensive ESG integration over the next three years, led by High Yield and Investment Grade Corporate.

61%

say ESG integration into their fixed income portfolios is a high priority over the next 3 years.


50%

of European investors cite Best-in-Class as their preferred approach.


50%

of North American respondents cite Impact as their preferred approach.


ETFs in the Fixed Income Toolkit


ETF performance during 2020 pandemic-related market stress highlights new investment possibilities for institutions.


Appetite for Increasing ETF Use in FI Portfolios, Core and Non-Core   Institutional investors have a strong appetite to increase the use of ETFs within their global aggregate/core FI portfolios as well as in their non-core/ satellite FI exposures over the next three years.

68%

say that ETFs will play a bigger role in portfolio construction.


58%

cite ETFs' liquidity and price discovery benefits during the pandemic as key to their increased attraction.


71%

say they have a strong appetite to increase use of ETFs in their core fixed income portfolios

Appetite for Increasing ETF Use in FI Portfolios, Core and Non-Core   Institutional investors have a strong appetite to increase the use of ETFs within their global aggregate/core FI portfolios as well as in their non-core/ satellite FI exposures over the next three years.

68%

say that ETFs will play a bigger role in portfolio construction.


58%

cite ETFs' liquidity and price discovery benefits during the pandemic as key to their increased attraction.


71%

say they have a strong appetite to increase use of ETFs in their core fixed income portfolios

Appetite for Increasing ETF Use in FI Portfolios, Core and Non-Core Institutional investors have a strong appetite to increase the use of ETFs within their global aggregate/core FI portfolios as well as in their non-core/ satellite FI exposures over the next three years.

68%

say that ETFs will play a bigger role in portfolio construction.


58%

cite ETFs' liquidity and price discovery benefits during the pandemic as key to their increased attraction.


71%

say they have a strong appetite to increase use of ETFs in their core fixed income portfolios

Appetite for Increasing ETF Use in FI Portfolios, Core and Non-Core Institutional investors have a strong appetite to increase the use of ETFs within their global aggregate/core FI portfolios as well as in their non-core/ satellite FI exposures over the next three years.

68%

say that ETFs will play a bigger role in portfolio construction.


58%

cite ETFs' liquidity and price discovery benefits during the pandemic as key to their increased attraction.


71%

say they have a strong appetite to increase use of ETFs in their core fixed income portfolios

Appetite for Increasing ETF Use in FI Portfolios, Core and Non-Core Institutional investors have a strong appetite to increase the use of ETFs within their global aggregate/core FI portfolios as well as in their non-core/ satellite FI exposures over the next three years.

68%

say that ETFs will play a bigger role in portfolio construction.


58%

cite ETFs' liquidity and price discovery benefits during the pandemic as key to their increased attraction.


71%

say they have a strong appetite to increase use of ETFs in their core fixed income portfolios


The Move to Indexed Fixed Income


Low yields, new capabilities, and structural changes are driving a move towards indexing across the fixed income spectrum.


Planned Future Index FI Allocations, by Strategy   Over the next three years more than one-third of institutional investors plan to increase their allocation to index strategies for: High Yield, Developed Market Sovereign, Emerging Market Debt, Global Aggregate/Core, and Investment Grade Corporate.
Indexing North America
Indexing Europe
Indexing Australia

60+%

say that increased use of indexing is a high priority for both core and non-core FI exposures over the next three years.


38%

report that maximizing the impact of asset allocations is their key driver for index adoption.


33%

will make the move because they believe the opportunity to add alpha is in decline.



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