Fixed income update

Successful vaccine rollouts are driving optimism for the global economy. Head of Multi Asset, Trevor Greetham, will explain why the current environment means the investment clock remains in an overheat position and how this should prove positive for multi asset portfolios with higher weightings in commodities, UK equities and commercial property.

However, Trevor will provide a note of warning and review whether monetary policy may need to tighten should the economic recovery gather pace and inflationary pressures remain.

Executive remuneration has always garnered attention. This has largely been for negative reasons as pay packages have continued to grow and the gap widen between executives and their employees. This was true under normal circumstances; but what happens when the world goes into lockdown, employees are sent home and entire industries fall silent? After the initial emergency steps were taken, what does the new normal look like? Who has responded positively and stuck to their commitments? And who has fallen back into bad habits? Following the recent publication of our Stewardship and responsible investment 2021 report; Sophie Johnson, Corporate Governance Manager and Jeffrey Ndeti, Corporate Governance Analyst will share insights into RLAM’s views and approach when engaging. They will highlight examples from the past year, sharing the positives, negatives and the unknowns of executive remuneration during a period of unprecedented change and uncertainty.

Mike Fox, Head of Sustainable Investments, shares his latest quarterly review and update on sustainable investing at RLAM.

Investors are increasingly moving towards a greener and more sustainable approach, driven indirectly through regulations and more directly through meeting heightened stakeholder expectations. In this live and interactive webinar we will analyse what sustainable investing means at RLAM and the specific themes that shape our approach. We will provide insights from a fixed income perspective and an assessment of the key challenges, risks and pitfalls that can come with sustainable investing within credit.

Please join Chris Mills, Institutional Client Solutions Director, alongside Shalin Shah, Senior Fixed Income Fund Manager, and Matt Franklin, Senior Credit Analyst as they share our views on how best to construct a sustainable credit investment portfolio.

The recent pandemic has created a period of intense uncertainty and volatility in markets but it has been a catalyst for change. There are opportunities for those that can adjust to this evolving backdrop and many listed companies in UK mid cap are doing just that. Digital innovation, lifestyle changes, market consolidation and supply chain security are just some of the thematic drivers that are accelerating the growth backdrop for these companies.

Henry Lowson, Head of UK Alpha Equities, discusses recent portfolio activity which has focused on identifying these opportunities.

Head of Responsible Investment, Ashley Hamilton-Claxton and Responsible Investment Operations Manager, Beth Goldsmith, will provide an overview of the activity undertaken by the team over the past year including the stewardship of RLAM’s investments and the integration of ESG into investment processes. They will also provide an assessment of current themes in the market, such as SFDR and TCFD and conclude with an outlook on how the landscape for responsible investing may evolve.

The race to zero emissions is gaining momentum and decarbonisation commitments from corporates and governments are increasing ahead of the next UNFCCC COP26*. The apparent gap between the science-based emissions’ reductions required to halt climate change and the trajectory of the economy seems to be closing, as shown in the recently published International Energy Agency (IEA) Net Zero 2050 scenario modelling. But what is the size of the gap? How trustworthy are these Net Zero commitments? And, what is RLAM’s role in achieving Net Zero and helping our clients to fulfil their own climate commitments? Following the recent publication of our Stewardship & responsible investment 2021 and 2020 TCFD reports, Carlota Garcia-Manas, Head of Engagement and Simonetta Spavieri, Responsible Investment Analyst will share insights on RLAM’s climate strategy: they will unravel the climate regulatory maze, highlight the shortfalls and improvements in climate metrics and provide examples of how all this influences RLAM’s ambition to be a catalyst for a Paris-aligned economy.

*United Nations Framework Convention on Climate Change, 26th Conference of the Parties.

Trevor Greetham, Head of Multi Asset, explains why the Investment Clock remains in an ‘overheat’ position and argues that monetary policy may tighten should the economic recovery gather pace and inflationary pressures remain.

Will Kenney, Senior Fund Manager, examines the current economic environment, where inflation remains in focus. He reviews the Global Equity team’s corporate life cycle investment process and focuses on examples of ‘accelerator’ and ‘turnaround’ holdings.

As yields have reached an all-time low, Head of Alpha Strategies, Paul Rayner will outline his thoughts on whether government bond markets should still be viewed as a ‘risk off’ asset allocation. With record levels of financial stimulus from central banks, Paul will consider the inflationary effect and whether the risks associated with governments bonds should be re-considered. He will also provide a view on what the future may look like for this perceived ‘safe haven’.

Head of Multi Asset, Trevor Greetham and Senior Economist, Melanie Baker consider how inflationary pressures are very much in evidence as developed economies re-open. However, they believe fiscal and monetary policy is extremely loose and policy makers appear to be in no hurry to tighten.

Trevor and Melanie will debate:
• What are the risks that a short term burst of inflation will become more entrenched?
• Which sectors and asset classes are most likely to protect purchasing power?
• Does this period finally spell the end for the bull market in bonds?
• Should investors be looking to diversify more broadly, to protect wealth and to capitalise on emerging trends?

Head of Rates and Cash, Craig Inches will provide a summary of cash rates, credit spreads and a view on the direction that base rates may head towards. Craig will argue that although negative interest rates no longer seem imminent, yields remain low and RLAM provide a range of cash solutions which aim to meet different client objectives. He will provide an update on how ESG is being integrated into the security selection process before finishing with a market outlook for the remainder of 2021.

Stewardship and Responsible Investing Report 2021 from Royal London Asset Management

Government bond yields rose significantly over the first quarter of 2021. Head of Sterling Credit, Paola Binns will provide an insight into the reasons why before a more specific update on how the market has impacted key funds. Paola will provide an overview on positioning and liquidity within the respective funds, which differentiates them from peers in the market, before concluding with a market outlook for the remainder of the year.

Will Kenney, Senior Fund Manager, reviews the current environment and whether inflationary pressures may be transitory or become more established. Will evaluates the impact this may have on the Global Equity team’s bottom up, stock specific, corporate lifecycle investment process.

Trevor Greetham, Head of Multi Asset, explains why the investment clock is currently in an overheat position and the rationale for the asset allocation within RLAM’s risk-rated multi asset funds. He also highlights why investors may see more rotation than appreciation in stock markets over the coming months.

As the global economy reopens, Head of Multi Asset, Trevor Greetham, explains why he thinks we may see more rotation than appreciation in stock markets as highly valued technology shares struggle in the face of rising bond yields. A more inflationary post-Covid recovery should benefit multi asset portfolios with higher weightings in commodities, UK equities and commercial property in his view.

Head of Fixed Income, Jonathan Platt and Senior Client Portfolio Manager, Ewan McAlpine will provide an overview of fixed income markets in Q1 2021 and an outlook for the year ahead. Jonathan and Ewan will cover the rise in yields, particularly in Q1, the shape of the yield curve and the direction in which yields may head to next. They will discuss the performance drivers in bond markets and the importance of income.

Finally they will conclude with their thoughts on a recovery and the possibility of inflationary pressure and interest rate rises further down the line.