Episodes 248 & 249 of the InsuranceAUM Podcast + 13 New Articles!
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Episode 249: Zombie Securitizations and Tail Risks: Understanding Fixed Income Challenges
In this episode of the InsuranceAUM.com Podcast, host Stewart Foley , sits down with Jake Remley , CFA, senior portfolio manager at Income Research + Management , for a deep dive into the world of structured securities. Jake brings his 20-plus years of experience in securitization to the discussion, explaining complex concepts like "zombie securitizations" and how to identify tail risks in the evolving landscape of asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS).
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Episode 248: Why are Residential Whole Loans the Talk of the Town?
In this episode of the InsuranceAUM.com Podcast, host Stewart Foley , speaks with Alfred Chang , Head of Residential Credit at MetLife Investment Management , about the growing role of residential whole loans in insurance portfolios. As a repeat guest, Alfred shares valuable insights into why this asset class is gaining traction, particularly for life insurers seeking capital efficiency and risk-adjusted returns. He compares the benefits of investing in residential whole loans versus public RMBS, highlighting how the private market offers unique opportunities through better control and transparency. Alfred also explains how a lack of housing supply and improved credit quality have made today’s market very different from the housing crash of 2008.
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Fiscal (Un)Sustainability
Deficits Don’t Matter…Until They Do
The topic of deficit spending has long been debated. Rooted in Keynesian economics, the theory holds that governments should stimulate the economy by borrowing and spending during an economic downturn, and then reverse once the crisis has passed. But contrary to Keynes' theory, deficits in the U.S. have persisted even during thriving economies. Following the 1981-1982 downturn, the Reagan administration experimented with “trickle down” economics, a supply side approach suggesting lower taxes on higher income earners would encourage more economic growth and investment that would benefit the entire nation. Indeed, U.S. GDP took off as the highest marginal income tax rate was cut from 70% to 30% alongside other tax cuts. The economy went on to grow at an impressive 26% over the 8 years of Reagan’s presidency, along with ballooning deficits that continued throughout the decade.
Click HERE to read more from New England Asset Management Limited (NEAM Ltd.)
Portfolio Finance for Insurers
In this interview with AM Best, Dadong Yan discusses what portfolio finance is and how it offers an attractive opportunity for insurance companies today.
Dadong Yan, Head of Barings Portfolio Finance, said portfolio finance is the next extension in the evolution of private investment grade assets. “To source portfolio finance investment opportunities, you need to invest the time to build deep, meaningful relationships with asset managers,” he said.
Will Government Debt be the Next Big Thing for Bond Markets?
The Greek poet Archilochus wrote, "The fox knows many things, but the hedgehog knows one big thing." Global bond markets are typically more hedgehog than fox: they focus on “the one big thing.” Since 2022, that big thing has been the COVID-19 pandemic-driven inflation surge and the efforts of the G-20 central banks to bring it down. Interest rate hikes have done their job; inflation is falling nearly everywhere, and (ex-Japan) the global rate cycle has turned towards ease. Unfortunately, a host of fiscal challenges has left G-20 governments in a worse fiscal place than before COVID, and many of these governments have, or can expect, new leadership. In many countries, fiscal policy and its multiple knock-on effects may replace monetary policy as the new challenge to fixed income valuation, in our view. We believe developed market (DM) bond investors may have to consider more than one big thing at a time
Click HERE to read more from Loomis, Sayles & Company
The next frontiers in artificial intelligence
Where are the next investment opportunities in artificial intelligence? We examine the three themes that we believe will drive the future of AI.
An Alternative to Banking-as-Usual
Why Annuity Insurance and Alternative Credit Are Natural Partners for Long-Term Performance
As more and more investors seek the elusive twin goals of safety and guaranteed returns, a strengthening alignment between insurance companies and alternative asset managers is producing what many market veterans view to be an alternative model for long-term performance.
Click HERE to read more from Ares Management Corporation
Relative Value & Tactical Asset Allocation Q4 2024
Key Takeaways
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U.S. Economic and Property Market Outlook
The U.S. economy expanded at an annual rate of 2.1% during the first six months of 2024, generally above expectations but significantly slower than the 4.1% real GDP growth recorded over the last six months of 2023. U.S. employment growth also continued to slow, with growth decelerating to a year-over-year pace of 1.6% in July, the slowest employment growth pace since the beginning of the Federal Reserve monetary policy tightening at the end of March 2022.
The Navigator: U.S. Elections: A view from inside the beltway
In this special episode of The Navigator, Tim Leary, Senior Portfolio Manager on the BlueBay U.S. Fixed Income team, and Clay Lowery, Executive Vice President, Research and Policy at the Institute for International Finance, discuss the mood in Washington, DC leading up to the election on November 5th. ?They go into detail on the potential outcomes and the policy impacts of what comes next, and address what it all means for financial markets and the global economy.?
Click HERE to listen to RBC Global Asset Management 's podcast
From the Field: Cutting cycles and learning to love bonds again
With the Fed widely expected to cut rates in September, we looked at how different asset classes performed during past cutting cycles. Bonds consistently outperformed cash and stocks often outperformed bonds, but the evidence is less clear for small-cap versus large-cap and other trade-offs.
Click HERE to read more from T. Rowe Price
Seniors Housing Research Perspective
Demand remained robust through the first half of 2024 with momentum expected to carry forward over the long-term. Demographics and the need for non-family care providers are pushing demand at a time when construction of new product is at historic lows. Acceptance of the product has proven out even after a global health crisis that had severe impacts on the elderly.
Trade Winds: October 2024
The much-awaited, anticipated, and debated Fed decision took place over the month. After years of tightening the reigns, the Fed reduced its benchmark rate by 50 basis points as it began to “recalibrate” its policy positioning. ?With stubbornly high inflation subsiding and the labor market softening, the Fed leaned on the more aggressive side of the market’s expectations to preserve labor market resilience while continuing to bring inflation down to its target range.
Click HERE to read more from New England Asset Management, Inc. (NEAM, Inc.)
Reshoring Shifting sands or cyclical waves
A look at how Emerging Asia economies – and Mexico – are benefiting from a shift in global supply chains.??
The Implications of CLO Intrinsic Price Designations for Investment Strategies & Capital Markets
This report explores the properties of CLO Intrinsic Price Designations, the ways they depart from the existing RBC framework, and the capital-favorable investment strategy incentives they generate. Critical to the discussion, we provide guidance on aligning Intrinsic Price Designations with the RBC framework. The hope is for the analysis to serve as a starting point in assessing the materiality of various modeling features that can possibly improve the RBC framework.
Click HERE to read more from Bridgeway Analytics