DB investors to use alternative credit for both opportunistic, structured allocation

first_imgThe use of alternative credit within defined benefit (DB) portfolios is used for both opportunistic investing and tactical asset allocation, research shows.A report, produced by CREATE-Research, into investor views on asset allocation and emerging markets found that while asset classes generally fall into either category, alternative credit is used in both.The same was found in emerging market equities.Research among 700 pension funds, pensions consultants, asset managers and sovereign wealth funds found 56% would use alternative credit for medium-term investing, matched with 48% for short-term opportunities. Within emerging market equities, 50% would use the asset class for tactical asset allocation, and 53% for opportunism.Emerging market corporate bonds were also picked by the majority of investors for opportunistic investments, compared with only 26% that would hold a medium-term allocation.The research, sponsored by Principal Global Invetsors, also looked at investor views on emerging markets.It found the proportion of investors looking for bond and equity opportunities in emerging markets jumped between 2012 and 2014.In 2012, only 15% of respondents said they would use emerging market bonds for opportunistic investing, compared with 51% in 2014, while over the same period those who would use them for buy-and-hold investing dropped from 44% to 34%.Jim McCaughan, chief executive of Principal Global Investors, said he interpreted this development as an indication of banks’ weakness.“Emerging market corporates that needed debt five years ago probably went to a European bank,” he said.He said, due to the financial crisis and regulatory changes, the shift away from banks had led to an increase in issuance for investment management firms and pension funds.“This included local currency, so investors are seeing this issuance, but also the volatility, and use it opportunistically rather than structurally,” he said.“You can also play them both long and short on currencies, as well as on the bonds.”The report also highlighted a growing consensus among institutional investors of a divergence between emerging economies and how different markets will grow in future.Sentiment for China remained strong. However, fellow BRIC nations India, Russia and Brazil all saw significant negative sentiment.Investors also expected developed and emerging economies to see a convergence among asset-class correlation and liquidity, but for buy-and-hold investing to remain a developed market concept.“This suggests a lot of trust in markets, or at least in the inevitability of adopting the Western system,” McCaughan said.“I’m not sure if that’s correct, but there is a widespread belief global best practices will spread to emerging markets.”last_img read more

Pellegrini: This season was easier

first_img Pellegrini said: “Maybe it is not the most important reason why we failed in this season, because we lost a lot of points against teams that are not stronger than our squad, but against Chelsea or Arsenal or Manchester United if you have restrictions and the other clubs don’t have them, of course it is an advantage. “This year we will all be in the same condition and we will see which is the team that works more to have a strong squad.” UEFA president Michel Platini has suggested FFP rules could be eased in future. This would be welcomed at City, who have found their Abu Dhabi-backed spending limited despite being completely debt free. Pellegrini said: “When we don’t have any debt with anyone, I don’t see why we have restrictions. It is the thing I am glad to review. I never understand the rules of Financial Fair Play.” Before looking ahead, City need to complete this season. Southampton are the final-day visitors to the Etihad Stadium and after five wins in succession to secure second place, Pellegrini wants to continue the run. He said: “We must finish here at home trying to win. “I said to the squad the second position is finished but I don’t think the season is finished. “We have the last game here at home and we must be motivated to win in front of our fans and have a good game and a good farewell to the season. The best way to do it is to win.” Pellegrini claims he had a tougher time in his first campaign as City boss and has just been let down by some rudimentary mistakes this term. Pellegrini’s side fell away badly in the second half of the season, tamely surrendering their Barclays Premier League crown to Chelsea after being joint-top in January. The Chilean is due to meet with club officials to analyse where things went wrong but he insists he has not found the going tougher. The 61-year-old said: “No, I don’t think so. Last season was for me harder than this one because it was my first season here in the Premier League. “This season, for different reasons, we are not the strong squad we played last year. We made a lot of mistakes – especially against teams who are not in a good position, the teams who are in the relegated positions, we lost nine points against them – and we lost at home in both cups. “Maybe we will continue being a high-scoring team but we must be a more consistent team that doesn’t lose points against teams in the relegated positions.” One area where City have been criticised since winning the title last season is in their recruitment, with none of their main summer signings last year having particularly impressed. Eliaquim Mangala has been the chief disappointment after his £42million move from Porto but Fernando and Bacary Sagna have also made limited impact. But City were also constrained by restrictions imposed on them by European governing body UEFA for breaking Financial Fair Play rules. Free of the limitations of a £49million net spending cap they could make a greater impression in the transfer market this summer. Manchester City boss Manuel Pellegrini does not think he has fallen victim to a managerial ‘second-season syndrome’. Press Associationlast_img read more