No place to hide for alternatives
There was no place to hide for funds in the alternative income space in 2008, according to the latest sector review produced by ratings house Lonsec.
The Lonsec Alternative Income Sector Review, released this month, said funds had found no place to hide because “all credit markets experienced varying degrees of market price stress”.
However, the review analysis pointed to improving fortunes in the sector, stating that so far in 2009, risk appetite appeared to have returned and that investment grade credit had rallied strongly from what had been the highest spreads in 50 years.
It said this had been outstripped by high yield bond and loan markets and that the high yield bond market had even outpaced the equities market, driven in part by a surge in retail demand in the US.
Looking at events over the past 12 months, the Lonsec review said more globally focused funds, such as the BlackRock Monthly Income Fund, the CFS Global Credit Income Fund, the Credit Suisse Global Income Fund and the Principal Global Strategic Income Fund, had been impacted by more savage mark-to-market write-downs than those with more moderate exposures.
However, it noted that, on the upside, global funds reported better liquidity or a more rapid return to liquidity than their Australian-focused counterparts.
The Lonsec review saw just one fund, the Macquarie Income Opportunities Fund, emerge with a ‘highly recommended’ rating, while eight funds received a ‘recommended’ rating and three an ‘investment grade’ rating.
Two funds, the CFS Income Fund (Wholesale) and the AMP Enhanced Yield Fund, remained ‘on hold’.
Recommended for you
With Fortnum Private Wealth and Professional Financial Services now unified under the Entireti umbrella company, CEO Neil Younger has detailed to Money Management the firm’s new direction and future expansion.
The FAAA has suggested looking offshore for overseas financial advisers to ease the adviser shortage, but are employers willing to take on the burden of workplace visas?
There may be a huge influx of alternatives coming to the market, but timing and access difficulties mean advisers can easily end up disappointed with their selection, according to Morningstar global CIO Dan Kemp.
An NSW individual has pleaded guilty to one criminal charge of providing unlicensed financial services after promoting crypto investments at national seminars.