$1trn at risk from fixed income investor fears – Casey Quirk paper

US investors concerned about a turnaround in the interest rate environment could trigger a redemption of $1trn worth of core, core-plus, government and benchmark-pegged fixed income strategies, according to a White Paper from Casey, Quirk & Associates.

“Higher interest rates would disproportionately impact individuals and defined contribution plan participants, who hold nearly $5trn of the aggregate $7.4trn US investor exposure to professionally managed fixed income,” Casey Quirk said.

“Even a zero-rate environment would lead to outflows as digruntled investors seek higher returns,” it added.

Yariv Itah, partner at Casey Quirk and lead author of When the Tide Turns: Building Next Generation Fixed Income Managers, said that winning firms will diversify their revenue away from legacy strategies.

Changes required to adapt to the pending changes envisaged include upgrading fixed income models to offer multi-sector, multi-currency and multi-region portfolios; repositioning as yield specialists, to meet growing demand for income; adding loan origination and direct lending capabilities; and seeking diversification by developing or acquiring alternative, multi-asset class and equity skills.

Companies that can adapt stand to capture some $6.4bn in new revenue from “next generation fixed income strategies”.

To read the White Paper click here: [asset_library_tag 6695,When the Tide Turns: Building Next Generation Fixed Income Managers]


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