Investment themes for 2019

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Global macroeconomic outlook


With global growth now softening, potentially limiting central bank policy, we examine what we believe could be the key thematic risks for 2019. These include the transition from quantitative easing to quantitative tightening, growing protectionism and trade conflict and rising political risk stemming from a shift towards nationalist and populist politics. Although we are cautious on the outlook for 2019, there is an argument that some of this negative news is already priced into some markets.


Watch Andrew Wickham, Head of Fixed Income (UK), and Gareth Colesmith, Head of Global Rates and Macro Research, discuss the outlook for the global economic, market and political outlook for 2019 (21:52 mins). 

Source: Insight Investment. Video as at 17 January 2019.

Global credit


In 2019 we expect credit spreads to remain wide and for volatility to remain elevated. A greater concern, however, is the prospect of a rise in ‘fallen angels’, given the growth in outstanding BBB-rated debt. We examine how the structure of global credit markets is changing, due to changes in US credit and the growing importance of emerging market issuance, with the addition of China to mainstream credit indices a key event in 2019. We also examine the increasingly important role that ESG is playing for credit spreads.


Watch Lucy Speake, Deputy Head of Fixed Income and Head of European Fixed Income, and Colm McDonagh, Head of Emerging Market Fixed Income, discuss the themes we believe will be key to global credit markets in 2019 (23:08 mins). 

Source: Insight Investment. Video as at 17 January 2019.

The evolution in cashflow-driven investment techniques


We examine why CDI solutions have evolved to become more sophisticated than just buy and hold strategies as cashflow uncertainty has grown. We then take a deep dive into contractual assets and which are the assets we believe are most appropriate for a CDI strategy, including how CDI managers need to focus on cashflow metrics rather than traditional return metrics.


Watch Peter Bentley, Deputy Head of Fixed Income and Head of Global Credit, and Ren Lin, Head of Client Strategy and Innovation, discuss our outlook for LDI and provide an update on the transition away from LIBOR (26:08 mins). 

Source: Insight Investment. Video as at 17 January 2019.

Themes in liability-driven investment


There has been some speculation that LDI as a trend is in the process of peaking – we disagree with this view and believe that LDI is plateauing and outline the reasons why we believe this. Taking a deeper look into important themes and events for LDI investors we examine the case for a synthetic credit overlay and provide an update on the transition away from LIBOR as a benchmark interest rate.


Watch Robert Gall, Head of Market Strategy, and David Jamieson (CFA), Senior Market Strategist, discuss our outlook for LDI and provide an update on the transition away from LIBOR (24:49 mins). 

Source: Insight Investment. Video as at 17 January 2019.

Important information

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.

Investments in emerging markets can be less liquid and riskier than more developed markets and difficulties in accounting, dealing, settlement and custody may arise.

Exposure to international markets means exposure to changes in currency rates which could affect the value of the portfolio.

Where high yield instruments are held, their low credit rating indicates a greater risk of default, which would affect the value of the portfolio

The investment manager may invest in instruments which can be difficult to sell when markets are stressed.

Forecasts and forecast returns are estimates based on data that is currently available. As such, they are not a reliable indicator of future performance.