Aviva Investors Global High Yield Bond fund has reached more than US$2 billion in assets under management at its fourth anniversary, collecting US$1 billion in the past five months alone.
Aviva Investors says demand from institutional investors is being driven by historically low yields from government bonds coupled with the diversification benefits that global high yield bonds can provide due to their low correlation with other asset classes. An increased appetite to de-risk portfolios with a fixed income asset that offers equity-like returns is another draw for investors, making high yield bonds more and more an asset class in its own right.
Todd Youngberg, global investment director of fixed income and head of high yield investments, said: “High yield bonds have historically provided returns similar to those of equities but with around half of the risk. This coupled with high yield bonds not having behaved much like other fixed income securities means investors have started viewing them as an equity surrogate. They are a good way to de-risk a portfolio, providing diversification benefits to any fixed income investment, while not sacrificing much in the way of returns relative to equities over the long term.”
Consequently, Todd says that a number of investors now allocate to high yield not as a percentage of fixed income, or equity, but as a percentage of their whole portfolio. This in turn plays to Aviva Investors’ strength as a global asset manager:
“We view high yield bonds as an asset class in its own right. Investing successfully in this specialist area calls for disciplined research and risk management capabilities. As a result, we have a broad client base from Europe, Asia, Canada and South America including pension funds, insurance companies, financial institutions and fund of funds.”
The Fund primarily invests in high yield corporate bonds issued by firms domiciled across the globe and is managed by the Aviva Investors High Yield team.
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