Nearly half (47%) of institutional investors expect issuance in Europe of asset-backed securities (ABSs), such as fixed income securities listed on regulated and unregulated stock markets, to rise over the next three years, according to new research by Managing Partners Group (MPG), the international asset management group.
The research found that 30% of institutional investors expect to increase their exposure to ABSs over the next three years. The most common reason cited for doing so is that they are attractive on a risk/return basis (40%); 30% say they give better yields than are available elsewhere in the market and another 30% like the fact they are secured against real underlying assets.
More than three in five (63%) investors say ABSs can be used to increase income in portfolios and 51% say they can be used to cut overall risk.
Jeremy Leach, Chief Executive Officer at MPG, commented: "The growing popularity of asset-backed securities is understandable given that they offer outstanding levels of income secured against real underlying assets in an environment in which so many asset classes offer unimpressive returns. The yield most commonly identified as the "sweet spot" for them by our respondents is 4.1-5.0%, which is very attractive when interest rates are at record lows globally."