The tide turns

In the midst of the COVID-19 shock, Felix Mantz from Lincoln Pensions and Joachim Sudre from Aviva Investors explore how defined benefit pension schemes should plan their journey towards an end game and adopt a more holistic approach to risk.

While concerns around credit market liquidity have been rising since the global financial crisis, the COVID-19 sell-off has highlighted how fragile liquidity can be during periods of real stress. Colin Purdie discusses the short- and long-term implications for investment grade and high yield credit globally.

As an increasing number of companies battle the economic consequences of COVID-19, their ability to service bond payments is coming under intense scrutiny. In this Q&A, Sunita Kara considers whether current high-yield valuations adequately compensate investors for default risk and looks at the broader implications of the pandemic.

As China gradually emerges from lockdown, emerging market debt and equity investors are trying to gauge the impact of the coronavirus pandemic on its economy – and the knock-on effects for other emerging markets.

The scale and speed of COVID-19’s impact on global financial markets has caused emerging market debt returns to decline at a pace not seen since the global financial crisis. However, history suggests the recovery of the asset class may also turn out to be quick.

As COVID-19 sweeps across the world, a contraction in global growth is causing an adverse short-term reaction to the economy and financial markets. While the extent of contagion from public markets to private debt remains unclear, transactions with strong downside protection should remain more resilient through the crisis, explains Nikhil Chandra.

In the latest of our editorial series, Link, AIQ brings members of Aviva Investors’ investment strategy, equity and debt teams together to discuss the prospects for financial markets and the world economy in the face of the coronavirus epidemic.

UK investors considering whether to allocate to global investment-grade credit may discover the broader diversification benefits can significantly improve a portfolio’s overall risk dynamics.

Sunil Krishnan asks whether higher-yielding fixed income assets remain good diversifiers for multi-asset portfolios in the current environment.

Following a series of IMF meetings in Washington, D.C., Carmen Altenkirch and Dariusz Kedziora discuss their views on how reform prospects may shape emerging market debt.

Climate risk has become a critical business issue, but a recent consultation by the European Insurance and Occupational Pensions Authority highlights confusion on how to assess it.

In the strongest signal yet that central bank policies are upending the investment playbook, sub-zero conditions are extending to the high yield market for the first time. Sunita Kara, looks at the implications for investors.