Global credit: Capturing opportunity and value | Insight Investment

Yield trumps spreads – In our view, the level of yield available in global investment grade credit continues to represent an attractive draw to investors, outweighing the relatively low level of spreads. Higher income from higher yields provides a deeper buffer against potential capital losses in the event that yield levels rise.

Figure 1: Yields on global investment grade credit have risen to offer better value than for more than a decade

Source: Insight and Bloomberg as at 28 February 2025. Bloomberg Global Aggregate Credit Index.

Don’t be afraid of volatility – Historically, periods of high market volatility have been those where active managers like Insight have been able to thrive, while adopting a global approach allows managers to look across a rich and broad universe in the search for outperformance.

Figure 2: Alpha increases as implied volatility increases

Source: Insight and Mercer. Insight global credit strategy outperformance in USD terms, of Bloomberg Global Aggregate Credit Index hedged into USD, gross of fees. Mercer Insight Universe median manager alpha versus global credit sector benchmark index.

Adding further flexibility, to invest beyond the benchmark markets, can also enhance the scope for investors to capture the diverse range of value available, as well as provide some degree of protection during periods of crisis.

Figure 3: A global approach works when global crises hit

Source: Bloomberg, Recovery is measured as the median manager relative performance in the six-month period ending in: GFC: June 2009, Eurozone Crisis: April 2012, Energy Crisis: August 2016, COVID: September 2020 and Gilt Crisis: April 2023.