News & Commentary
• NN IP now has EUR 32 billion in assets under management in the Euro Credit asset class • NN IP is a pioneer in expanding the euro credit funds range with sustainable products • NN IP sees rising investor demand in sustainable credit products
• Research by the Sloan School of Management at Massachusetts Institute of Technology (MIT) shows that an optimal allocation to Emerging Markets Debt (EMD) is between 8%-35% of fixed income portfolio in rising rate environment • EMD still accounts for a weighting of 2%-6% in global bond benchmarks despite benefits • High yield, hard currency debt offers best potential in this context
The green bond market has seen a rapid expansion, with new issuance in 2017 reaching EUR 112bn, up from EUR 73bn in 2016, driven by improving guidelines and taxonomies, strong political support and a sharp rise in investor demand. Alongside this growth, the market has been extended with new impact investing products in the form of social and sustainability bonds that commit to social prosperity as well as environmental welfare. The key differentiator of these products is their use of proceeds, with social bonds used to finance new or existing social welfare investments, and sustainability bonds providing a combination of green and social benefits. Such products are beneficial to all stakeholders, providing an innovative financing model for issuers, boosting transparency in the market and contributing to society as a whole through ameliorating environmental and social welfare.
Brazil’s elections come at a difficult moment, with the presidential candidates under heavy market pressure to come up with a credible plan to reduce the fiscal gap. If the next president, to be elected in October, has no credible plan to control social security spending, financial markets are likely to sell off sharply, pushing the real lower, interest rates higher and putting increased pressure on the new Brazilian leadership to act. Maarten-Jan Bakkum, Senior Emerging Markets Strategist at NN Investment Partners explains:
NN Investment Partners (NN IP) is pleased to announce the appointment of Rani Piputri as Head of Automated Intelligence Investing, as of 1 September 2018. The appointment of Piputri underlines NN IP’s commitment to continuously invest in the next generation of research which utilizes digital technology, new data sources and further innovation of our investment approach.
NN Investment Partner’s (NN IP) NN Dutch Residential Mortgage Fund surpassed the EUR 2bn mark as of end May 2018. Since its inception in November 2015, the Fund has been growing steadily. This milestone underlines that investors increasingly invest in Dutch mortgages in a low yield environment.
NN Investment Partners (NN IP) is pleased to announce the appointment of Maarten Geerdink as Head of European Equities and Lead Portfolio Manager of its systematically-driven European Equity strategies.
Turkey’s economic problems and escalating tensions with the United States have dominated the headlines in recent days, causing a spike in risk aversion among investors globally and knocking confidence in emerging market (EM) assets. In the middle of this turmoil, NN Investment Partners (NN IP) has reduced its equity exposure to neutral. The Multi Asset team has also identified other factors than the Turkey crisis that may weigh on equity markets going forward, including a fading support from earnings momentum, weak sentiment, flow and technical indicators and other geopolitical risk factors like trade policy and the Italian budget discussion.
• The recent market correction was associated with increased value in Frontier Markets Debt (FMD) while the fundamentals remain strong. • In the very short term, NN Investment Partner (NN IP) remains cautious given headline risks and the prospect of a more challenging technical backdrop towards year-end. • After a strong snap back we continue to look for positive FMD returns on a six to twelve month horizon, with clear potential for strong idiosyncratic investment cases, in particular in some African states such as Ghana and Egypt.
Improving market dynamics, including better investor sentiment, low positioning and positive price momentum, means the chances of a major equities correction of 10%-plus are low. The likelihood is lessened further by strong corporate fundamentals, as demonstrated by one of the best US earnings seasons in Q2 of the past years; good macro data pointing to consolidation at a healthy level; gradual and predictable central bank policies; and the start of targeted Chinese easing to counter the growth slowdown and negative trade impact.