Our survey says: more fixed income flows

Investment flows into fixed income are expected to increase strongly this year, according to a new survey of professional investors.

The new data shows that 61% of those who answered the survey undertaken by Pollright at the behest of Tabula Investment Management believed there would be an increase in flows into fixed income.

In comparison, only one in five believed that fixed income flows would fall.

Michael John Lytle, chief executive at Tabula, which launched its debut high yield ETF in September said that fixed income flows within ETFs had increased in recent years.

He suggested that flows into fixed income could be partly fuelled by innovation within the ETF sector. Indeed, of those surveyed 8% think there will be a “dramatic” increase in fixed income ETFs while a further 43% anticipate an increase to some degree.

When it comes to the facets that the professionals believe that ETF providers will need to adopt in order to attract investment, 70% believe that the most important feature will be specialisation in certain key areas and develop propositions around these. Meanwhile, 62% said that having unique and innovative products would be needed to improve the chances of attracting enough funds.

“Flows into fixed income investments, particularly through ETFs, have increased,” said Lytle. “To succeed in this market, you need to offer new investment opportunities with competitive fees which address some of the key concerns that fixed income investors face.

“For example, to emphasise credit returns and reduce direct interest rate risk, our current ETFs are invested in a range of liquid credit default swap (CDS) indices rather than individual corporate bonds.”

Bearing in mind Tabula’s own recent provenance, the company will be heartened that a majority (67%) of those surveyed also believed that new entrants would prove to be effective in attracting investors and growing their business while a further 6% believed they would be “very effective.” Only 18% think they will be ‘ineffective’.

Lytle gave a brief update on Tabula, saying that he expected to be adding to the three current funds in the next few months. “We launched our business last year and now have three exciting and unique fixed income ETFs listed, focusing on the European corporate credit market,” he said. “We have other fixed income ETFs planned for the coming months.”

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