Talking Heads

While many bond investors have felt the earth move under the feet this year as the asset class experienced the finale of a 50-year bull market, the denouement has not stripped them of opportunities, Arnaud-Guilhem Lamy, head of euro aggregate bond management strategies, tells chief market strategist Daniel Morris. 

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As part of its contribution to the low carbon energy transition, BNP Paribas Asset Management is taking action and implementing best practice, including in its investment strategies. This includes working with clients on decarbonisation and setting internal targets to progressively increase the share of assets under management aligned with net zero greenhouse gas emissions. 

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The tide is rising for water as an investment theme as it benefits from a growing awareness of both climate change and years of underinvestment, particularly in water infrastructure. This focus should have a direct positive impact on companies providing water solutions, Justin Winter, water strategy co-manager, tells Andrew Craig, co-head of the investment insights centre. 

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In a continued correction, the Chinese equity market has underperformed other emerging markets this year, but various metrics are pointing to opportunities, while the authorities appear to have begun addressing two ‘big mountains’ standing in the way of a rebound – China’s tough measures to crush Covid outbreaks and the property market crisis. 

Tumultuous geopolitical and economic times may be clouding the prospects for the high-growth renewables sector now, but investors should not lose sight of the longer-term potential of areas such as solar and green hydrogen, Edward Lees, co-head of the Environmental Strategies Group, tells chief market strategist Daniel Morris on our weekly Talking heads podcast. 

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Thematic investing, which centres on the long-term forces that shape consumer needs and industries, is a way for investors pivot away from traditional 60-40 portfolios to a broad and diversified set of opportunities that can create market-beating returns spanning several generations. 

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Investors shell-shocked by the fallout from high inflation, rising interest rates and slowing economies and looking to alternative markets for portfolio diversification and attractive returns might want to consider a relatively young and little known asset class: direct small lending.

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While equity markets are feeling the pinch from rising real rates, earnings reports and guidance are yet to reflect the effects of the encroaching recession. This leaves markets vulnerable to a downside correction once the message sinks in. 

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It is all hands on deck to deal with the current energy crisis, even if that forces countries to use more polluting fossil fuels to meet energy needs especially in the coming winter. However, that does not mean the transition to renewable resources should end up on the backburner. Instead, there is a clear case for accelerating the move to solar, wind and other sources of clean energy. 

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Senior secured corporate loans are debt instruments similar to high-yield bonds in that they are rated below investment-grade (Ba1/BB+). They differ from high-yield in that they are senior secured instruments, secured by all assets on a company’s balance sheet. In addition, as floating rate instruments, global loans are relatively immune to the adverse impact of rising interest rates.   

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