Institutional investors should go global when allocating to high yield bonds, according to Aviva Investors.
Its comments came as it announced that the Aviva Investors Global High Yield Bond Fund has seen inflows of $800 million from October 2011 to February 2012 from institutional investors across Europe, Canada and Asia. Aviva Investors’ global director of fixed income and hedge of high yield investments, Todd Youngberg, said: “Institutional investors allocating to regional high yield are putting themselves in ‘alpha handcuffs’ by not taking advantage of the global reach of the asset class. We believe the global high yield market offers a wider opportunity set and potentially more alpha sources from which to deliver returns, enabling investors to benefit from tactical and strategic allocations between regions.”
Youngberg added that a backdrop of low interest rates in developed sovereigns and low corporate default rates mean that investors will increasingly look beyond their borders to find higher yields.