ING Investment Management International’s ING (L) Renta Fund Global High Yield has surpassed the EUR5bn mark in assets under management (AUM).
Despite Asian and European investors being increasingly worried about rising interest rates, high yield continues to attract positive flows with returns attractive compared to those available within the fixed income space. Furthermore, the sensitivity to changes in interest rates is low within high yield.
ING IM’s outlook for the asset class remains cautiously optimistic and the investment manager prefers spread over rates, reflecting the belief that the credit fundamentals remain healthy leading to low default rates.
Furthermore, ING IM believes that the global economic recovery, particularly in the US, will lead to gradually rising interest rates.
Tim Dowling, head of global high yield at ING Investment Management, says: “Our overall return expectation for the asset class is a return of around five per cent which is near the current coupon yield levels. There is still some room for further spread tightening which is dampening the impact of rising interest rates. In contrast to emerging markets debt, the flows to the asset class remain supportive, particularly within the European space.”
Launched in 2001, the fund is managed on a total return basis, combining credit analysis on individual issuers with top down views on regions, credit quality, and industry sectors to construct a diversified investment portfolio that balances avoiding defaults with investments that offer attractive upside potential.
Dowling says: “At ING IM we prefer exposure to credit risk over the exposure to interest rate risk. Within Europe there is still a positive flow towards high yield while in the US we have seen some signs of rotation from fixed income to equities.”