ING IM backs high yield bonds

High yield bonds are the most attractive asset class for Dutch group ING Investment Management (IM) which has concerns about the US and Chinese real estate markets.

ING IM has faith in the high yield bond market in 2012 due to improving corporate confidence amid uncertain market outcomes.

The company said it expects the global economy to grow by 3% in 2012 with around 2% coming from emerging markets. Growth in developed markets would be affected by the eurozone crisis, on-going deleveraging of households and the financial sector, it said.

“2012 will continue in much the same vein as the tail end of 2011, populated by the well-known challenges that remain for the global economy and instable financial markets,” said Valentijn van Nieuwenhuijzen, head of strategy at ING IM.

“We predict that policy direction will remain uncertain in the problem zones, including Europe, US housing and Chinese real estate. Caution is needed when it comes to investor positioning and sentiment, with a clear underweight tilt towards risky assets and depressed return expectations for the year,” he said.

The group added that euro denominated assets would be influenced by system dynamics in the financial systems in the Eurozone while diversified spread products and emerging market-related assets would be more sensitive to the global cycle.

ING IM is not the only company claiming there is opportunity in the high yield bond market. One week ago Alliance Bernstein announced the launch of its short duration high yield fund. Last month German group Axa Investment Managers and Swiss group Syz and Co also launched high yield products.

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