Event: Big Call: Fixed Income ETFs 2019

The inaugural Big Call: Fixed Income event took place at the London Stock Exchange on 23 September with topics ranging from the current macro environment to a deep dive into fixed income ETFs.

Fixed income is certainly a hot topic at the moment. Investors face the challenging task of navigating an environment where yields continue to fall further into negative territory and central bankers are becoming increasingly dovish.

This was highlighted in our opening keynote by FTSE Russell’s director of fixed income research Robin Marshall, who warned western economies faced the prospects of following Japan in a period of stagnation. He also highlighted the increasing correlation between local currency emerging market debt and US Treasuries.

The macro theme continued in the first panel consisting of Tavistock Wealth’s CIO Christopher Peel and Barclays Investment Solutions’ head of asset allocation Jean-Paul Jaegers. The discussion was dominated by trade war concerns and negative yields. One of the most interesting points came from Peel, who likened the situation of investors having to buy bonds with a negative yield and only being able to make a positive return if someone is willing to pay more to a “Ponzi scheme”.

In the second panel, Paul Syms, head of EMEA ETF fixed income product management at Invesco, highlighted how investors are looking for more granular exposures in the asset class due to the ongoing hunt for yield while Stephen Isaacs, chairman of the investment committee at Alvine Capital warned of the dangers of CoCo bonds.

Meanwhile, M&G’s Jim Leaviss, who runs one of Europe’s largest bond funds, gave his insight in the fireside chat on the current situation in Europe and why ETFs can be useful in illiquid markets such as high yield and emerging market debt.

Nutmeg’s ETF research head James McManus, Morningstar’s Jose Garcia-Zarate and DWS’s Olivier Souliac took part in the third panel, which discussed the different ways investors are using fixed income ETFs. McManus and Garcia-Zarate both highlighted ESG ETFs as a key area of needed development in the European market while also myth-busting the supposed risks around ETFs and liquidity.

“Fixed income ETFs 2.0” was the title of the final panel and the clue was certainly in the name. AJ Bell’s Matt Brennan, Borsa Italiana’s Silvia Bolsoni and Twenty20 Investments’ CIO Irene Bauer discussed the lack of inflows into smart beta and active ETFs in the market and the current demand for government bond ETFs.

Rounding off the event was EDHEC Risk-Institute’s Professor of Finance Riccardo Rebonato, who discussed the latest findings in the firm’s annual smart beta survey, and Amundi’s head of UK ETFs, indexing and smart beta Ashley Fagan, who highlighted the lack of research around smart beta fixed income products.

A massive thank you goes out to all the speakers for giving such invaluable insight into the fixed income and ETF landscape and to our sponsors who helped make the event such a success.

We look forward to seeing you all at our Big Call: ESG Investors Forum event on 26 November at One Moorgate Place.