The most ignored risks in credit

Pendal Group

Pendal Group

The most ignored risks in credit. Portfolios in Australia are becoming less diversified as investors turn to riskier high yield credit and total return funds for yield. Credit has been a huge benefactor of the relatively low volatility in markets over the past 18 months, prompting an unprecedented switch away from what are now low-yielding traditional bond funds. Many investors are introducing extra risk into their portfolios by investing in these 'junk bonds'. Although higher yielding, these securities are relatively illiquid compared to their AAA investment grade counterparts and hold a positive correlation to equities when markets are under pressure. This means in times of market stress, the fixed income portion of your portfolio will fall with the equities component - and it takes much longer to pull out of loss-generating credit positions. It's smooth sailing for now but if volatility spikes (as it did recently) due to a liquidity event or a credit market correction, there is reason for concern. Then there's more issuance, less liquidity. Find out more about the greatest risks in credit from Dale Pereira (VIEW LINK)


At Pendal Group, our vision is to combine the benefits of our strong institutional foundation and performance-focused culture with a multi-boutique specialist investment approach. We believe this approach firmly positions Pendal to achieve...

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