![]() ![]() There, he boarded a New York-bound coffin ship, so named for the high mortality rate among passengers. From New York, Kearney, an intense-looking man with a pressed-down mat of dark hair, made his way to Ohio, and married an Ohio woman named Charlotte Holloway. When, in 1850, the Kearney family learned that a relative in America had bequeathed them a parcel of land, Falmouth Kearney, then nineteen years old, set out from his twelve-and-a-half-foot-wide house for Liverpool. In the tiny village of Moneygall, on the border of Offaly and Tipperary, the Kearney family turned to shoemaking. By the arrival of the Great Famine, they’d joined millions of fellow-citizens who were hungry for a restart. But the eighteen-hundreds brought a cold reappraisal of artificial hair. Wigs were popular among the aristocracy, and useful in a pre-shampoo era. Paul Cavalier, a partner at Mercer Investments in London, says that over the past couple of years clients have gradually shifted out of “core” strategies (such as buying government debt and investment-grade credit), into “core plus” (core, plus other geographies, higher yield and emerging market paper) then into “unconstrained” strategies (buying and selling a wider range of assets).Įvaporating bond yields, an unrelenting rise in stocks and a broad-based rally in most assets thanks to the $10 trillion of QE from central banks have altered the way investors should think now, Cavalier said.During the eighteenth century, a wigmaker in Ireland could expect to have a prosperous career. This means there is little scope for them to go further out the curve, so they are turning their attention to other areas of the bond universe. Pension funds have long-dated liabilities which they typically fund by buying long-dated assets. More than 5,000 schemes were in deficit, the watchdog said. The total assets under management of 6,057 schemes tracked by the Pension Protection Fund (PPF) index were 1,274 billion pounds, while liabilities stood at 1,641 billion pounds. Figures this week showed that the shortfall in Britain’s private sector pension plans rose to a record 367.5 billion pounds ($559.59 billion) at the end of January. This typically takes months.īut the pressure is building. The client will discuss the mandate, then decide to change and go through the alternative investments with the money manager, who will then liquidate funds and implement the new strategy. Even the yield on Swiss chocolate-maker Nestle’s 10-year bonds briefly went negative last month.īut changing investment mandates isn’t done lightly or quickly. Some $7.3 trillion of government bonds and bills around the world provide a negative yield, according to Bank of America Merrill Lynch calculations.Īll German government bond yields out to six years maturity and all Swiss bonds out to 10 years maturity are negative. This drove down inflation and with it bond yields, which have gone from ultra-low to negative in some cases. The problem of lower returns has become even more acute thanks to the 50 percent collapse in oil prices in the last half of 2014. That suggests investors’ scramble for yield will get even more intense than it already is. Of that $42 trillion pile, defined contribution assets accounted for 38 percent and should overtake defined benefit assets in the coming years. ![]() Pension fund assets at the end of last year were worth 84 percent of global gross domestic product compared with 54 percent in 2008, according to research firm Towers Watson. Money managers are increasingly rethinking their strategies, something they have been doing since central banks first started slashing interest rates to zero and introducing bond-buying “quantitative easing” programs in response to the 2007-08 global financial crisis. “This has been on investors’ minds for some time, but given how low yields are now, we’re expecting these conversations to become more frequent.” “Conversations with clients about changing mandates started about 18 months ago, but they have definitely picked up in the last quarter,” said April LaRusse, senior fixed income product specialist at Insight Investment, an asset manager owned by Bank of New York Mellon with 363 billion pounds of assets under management. This applies to a wide range of investors, from pension funds to central banks, who are finding it increasingly difficult to make money in an environment of deflation, zero interest rates and evaporating bond yields. Keen to stay in the broad fixed-income universe rather than move into other asset classes like equities or “alternative” investments such as hedge funds, they are taking on more risk by buying less liquid bonds or debt with a lower credit rating. LONDON (Reuters) - As yields on top-rated sovereign and even corporate bonds dwindle and disappear, investors who have long relied on that steady, guaranteed income stream are taking bigger gambles to achieve a reasonable level of returns for their clients. ![]()
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