New Study Shows Canadian Institutional Investors Embracing New Areas of Fixed Income in their Portfolios

Study Conducted by Coalition Greenwich and Commissioned by AGF Shows Asset Owners Recognize a Need to Diversify into New Sources of Yield Amid the Current Environment

TORONTO, May 24, 2022 (GLOBE NEWSWIRE) -- A new study conducted recently by Coalition Greenwich and commissioned by AGF Investments found that Canadian institutional investors remain deeply committed to having fixed income assets in their portfolios, but recognize a need to diversify beyond government and investment-grade corporate bonds to less traditional sources of yield that offer the potential of higher returns.

“It’s important for us to continue hearing directly from institutional investors about their appetite for fixed income investments,” said Karrie Van Belle, Chief Marketing & Innovation Officer, AGF Investments. “Not surprisingly in today’s low interest rate environment, greater emphasis is being placed on higher-yielding assets like private credit and strategies that allocate beyond government and investment-grade corporate bonds toward high-yield and EM debt.”

“At AGF, we remain committed to ensuring our institutional offerings align with investor preferences and provide access to the asset classes and strategies that meet their evolving needs,” Van Belle added.

Results from the Coalition Greenwich 2022 Fixed Income Investing Study (read the accompanying Whitepaper here) showed that asset owners continue to look to fixed income investments to manage volatility (67-88%), diversify away from equities (67-74%) and preserve capital (50-65%).

But the findings also show that, in a time of low interest rates, more emphasis is being placed on higher-yielding assets like private credit and strategies that allocate beyond government and investment-grade corporate bonds toward high-yield and EM debt.

Given the choice of several options known to provide higher potential yields, the majority (52%) of respondents cited core plus strategies that typically invest in a mix of government and investment-grade corporate bonds that are complemented by smaller allocations to high-yield, global and EM debt. Moreover, this preference is just as evident in the relatively high percentage of responses mentioning both high yield (32%) and EM debt (23%) more specifically.

Private credit is another highly sought-after investment of institutions seeking more yield, in particular for public and corporate pension plans. In fact, the study found that 42% of respondents prefer private credit for its higher yield and the diversification it brings to a portfolio.