Insurers’ portfolios: re-load the income engine, go beyond the traditional investment universe

Amundi
By June 10, 2021 16:37

Insurers’ portfolios: re-load the income engine, go beyond the traditional investment universe

US long-term yields have risen in recent months on expectations of strong economic growth fueled by fiscal stimulus. Eurozone long-term government yields have followed this movement in a limited way, as Eurozone economies have been hit hard by the Covid-19 crisis. The pandemic has increased economic fragmentation across European countries, putting pressure on the ECB to pursue its highly accommodative policy.

Against such a backdrop, European insurers’ search for yield for their fixed income portfolios is tricky. Moreover, diversification needs are ever more relevant today, since investors have already significantly expanded the euro credit share of their investments, leading to risk limit saturations on the main European issuers. Hence, European insurers should reconsider their core fixed income portfolios and go beyond the traditional euro investment grade (IG) universe. This could be done by investing into the non-euro IG space or into illiquid assets, but also by adopting a crossover approach rather than a pure IG strategy.

Amundi
By June 10, 2021 16:37

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