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Insight is an active fixed income manager dedicated to working in partnership with its clients to help them meet their investment goals.
As pension funds continue to mature, our clients are increasingly telling us that they need to:
- increase the certainty of returns through contractual cash-flows
- generate higher yields without taking additional credit risk
- diversify beyond mainstream credit
We strongly believe that institutional investors should consider integrating secured finance investment strategies into their portfolios in order to help achieve these objectives.
Why has secured finance got everyone talking?
Watch our video to hear Alex Veroude, Head of Credit and Deputy Head of Fixed Income (New York) and Gareth Mee, Executive Director, EMEIA Insurance, Ernst & Young discuss what makes Secured Finance so compelling for institutional investors.
Secured finance strategies can provide greater yield and lower risk than similar quality credit opportunities. In particular, they provide:
- A yield premium: There is an excess spread available to investors relative to investment-grade corporate credit without having to compromise on credit quality, due to the lower supply of credit to the market. What drives returns in secured finance?
- Greater cashflow certainty: At the heart of each investment is a contractual promise to pay, secured by ring-fenced or identified assets which increases the certainty of payment.
- Structural protection: Low loan-to-value ratios, covenants protecting the lender's position and structures with built in excess collateral are some of the ways that secured finance investments can be structured to help protect investors from defaults.
Click here for an explanation of how premiums for complexity and illiquidity drive returns in secured finance.
In our opinion, an allocation to Insight's secured finance portfolio can help you in a number of ways:
- Increase the return expectation of your credit allocation given the expected yield premium relative to traditional investment grade corporate credit markets.
- Reduce the volatility of your credit or broader bond allocation given the diversification properties of these investments relative to other bonds.
- Protect against the price impact of rising interest rates due to the floating-rate cashflows from the portfolio.
- Help to create a reliable buffer between your short-term, liquid cashflow generating assets and your longer-term, growth generating assets.
Application and account opening forms
Account opening form: LDI sub-funds
Account opening form for Bonds Plus, Bonds Plus 400, Loan, Broad Opportunities, Secured Finance and Government Liquidity Funds
Account opening form: LDI sub-funds (UK Pension Scheme Investors)
Account opening form for Bonds Plus, Bonds Plus 400, Loan, Broad Opportunities, Secured Finance and Government Liquidity Funds.
Fund and strategy profiles
In the press
On an even keel: alternatives to asset-backed securities
Heneg Parthenay and Simon Richards explore alternatives to asset-backed securities that offer attractive yields for European insurers while maintaining overall credit quality. Published in Insider Quarterly.
New opportunities in credit for pension funds
Shaheer Guirguis of Insight Investment discusses the emergence of secured fi nance in pension fund strategies and explains the key to successful investing in this asset space. Published in Professional Pensions.
Creating and managing portfolios in the secured finance market
Shaheer Guirguis of Insight Investment discusses the emergence of secured finance and explains the key to successful investing in this asset space. Published in IPE.
How has the secured finance market developed?
Head of secured finance at Insight Investment Shaheer Guirguis discusses the emergence of secured finance and explains the keys to successful investing in this asset space. Published in Professional Pensions.
Secured finance investments as a potential source of additional yield
In line with other developed markets, Nordic pension funds face the challenge of finding high quality fixed income instruments that offer attractive yields. Published in Nordic Fund Selection Journal.
Do you need to sacrifice credit risks to improve yields?
Shaheer Guirguis of Insight Investment explains why pension schemes might not have to take higher credit risks to earn higher yields than in corporate bonds. Published in Professional Pensions.
Secured finance: can extra yield be attained without sacrificing credit quality?
Investors may not have to look towards the lower end of the credit ratings spectrum in order to earn higher yields than those currently available in investment grade corporate bonds. Published in IPE.
Can extra yield be secured without sacrificing credit quality? | March 2017
Secured finance provides a huge variety of potential yield pick-up opportunities across risk and market types. Selecting from investments across the entire range of public and private debt markets enables investors to target diverse streams of stable, long-term, high-quality cash flows.
Using secured finance as a cornerstone in cash-flow driven strategies
DB pension funds face significant pressures as they mature. Many funds face the prospect of payments to retirees exceeding contribution income for the first time. By acknowledging the situation and planning for future disinvestments, pension funds can make use of maturing asset opportunities.
Opportunities in credit: secured finance | November 2016
There is a good match between the needs of long-term investors who desire a reasonable certainty of returns from their portfolios and the ability of certain parts of the credit markets to deliver against those requirements.
Transaction and switch forms
Team statistics as at 30 June 2017. Assets under management (AUM) are represented by the value of cash securities and other economic exposure managed for clients.
Please note: the value of investments and any income from them will fluctuate and is not guaranteed (this may be partly due to exchange rate fluctuations). Investors may not get back the full amount invested. Past performance is not a guide to future performance.
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