On its terminal, Bloomberg reports that “corporate bond investors have been going long this year, and it’s paid off for them.” Debt with at least 10 years until maturity is up 24% this year through Friday “as money managers clamor for the extra yield available for buying longer-term securities. The bonds are on track for their best annual returns since 1995, and in 2019 accounted for the largest proportion of debt sales since the crisis.” Voya Investment Management Co-Head of Investment Grade Credit Travis King said of the market, “It’s hard to see inflation or election fears materializing right now, and that’s why investors are relatively comfortable. At these inflation and yield levels, it looks like there’s a window to get in and out of these things and see them perform well.”
Voya Investment Management CIO Paul Zemsky was on CNBC discussing equity markets and where they may be headed. Zemsky said Voya has been increasing its exposure to cyclical stocks, saying, “the economy is bottoming. We see green shoots in Europe, green shoots in EM, and we believe purchasing managers around the world are bottoming. That means you want to be more in cyclical stocks.” Looking ahead, Zemsky believes election-related uncertainty could be a challenge starting for U.S. equities in the second quarter, while he believes European assets offer more value. “Europe was pricing negative rates forever, and while we may have zero-ish negative rates, they’re not going to be negative-seventy basis points like we had just a few months ago ... as we see the world’s industrial activity bottoming, European companies should do well,” according to Zemsky.
Voya Investment Management Managing Director and Head of Insurance Solutions John Simone was quoted throughout a recent article in Best’s Insurance News & Analysis as part of the publication’s year-end roundtable, exploring how “the prolonged low rate environment is continuing to put pressure on portfolios.” Simone believes life insurers have a subdued outlook heading into 2020, as 10-year Treasury rates have fallen despite expectations for a climb. Looking at the macro environment, Best believes that that policy mistakes and the ongoing U.S./China trade war are the biggest threats, though he does not see a U.S. recession is imminent, arguing that “the U.S. economy is still quite strong. But that doesn’t mean when you’re talking to clients and their boards they’re not getting ready for it.”
Voya Financial Managing Director of Insurance Investment Solutions John Simone and Voya Investment Management Fixed Income Client Portfolio Manager Brett Cornwell are quoted throughout a PlanSponsor article exploring the lessons defined benefit (DB) plans can take from insurance companies. Simone believes that the DB sector can draw on the insurance sector’s experience managing low interest rates to deal with the late credit cycle. Cornwell notes that DB plans have been adding more fixed income assets to their portfolios and cycling out of equities, though an over-exposure to corporate debt may create different risk factors for DB plans to consider. To better diversify their risk positions, Cornwell believes DB plans should follow insurance companies by investing in a variety of securitized sectors that are “not as narrowly defined as what DB plans use.”
Hurtsellers: Recession Fears Overblown, Negative Sentiment Offers Buying Opportunities In The Market
Voya Investment Management CEO Christine Hurtsellers was on Bloomberg TV discussing major issues impacting markets including the risk of recession in the U.S. Hurtsellers said that “We felt all along that fears of the U.S. recession were really overdone. When you think about things that need to be in place for a darkening of the economic view, you really need the U.S. consumer to be fearful. When you think about wage growth and savings north of 8%, the U.S. consumer is in great shape.” Hurtsellers said that negative sentiment in developed global markets could make them a buying opportunity, while debt markets are likely to offer steady returns in the short term.
ETF reports that WisdomTree has launched “an actively managed fixed-income ETF focused on mortgage-backed securities that are backed by the U.S. government or its agencies,” with Voya Investment Management subadvising the new fund “using macro and fundamental research.” Voya Head of Securitized Debt Dave Goodson said of the new offering, “This is not a place that has been particularly well served to date, and we see the opportunity there. Part of it is that there are still scars from the Financial Crisis. Certainly I would have to concede to you that securitized products were at the core of it.” However, Goodson notes that securitized markets “are a much safer place” than they were a decade ago, saying, “as an investor in those markets … I feel better protected than I ever have been. The balance of factors right now points in favor of securitized. From a tactical standpoint even, we think it makes sense now to have an allocation to securitized products.”
Voya Financial’s Jeffrey Bianchi, Michael Pytosh and Kristy Finnegan spoke with Investor’s Business Daily about their approach to managing the $1.1 billion Voya Large-Cap Growth Fund, which has outperformed its peers and received the 2019 IBD Best Mutual Fund Award. According to the article, the fund “earned that distinction by beating the S&P 500 in 2018 and topping the broad market benchmark over the three, five and 10 years ended last Dec. 31, on an average-annual-return basis.” Bianchi, Pytosh and Finnegan all were quoted about specific companies in which the fund has invested, with Bianchi describing the team’s investment strategy. “The overarching part of our philosophy is that we’re looking for positive change that is not necessarily anticipated by investors. Therefore, it’s not embedded in current valuations. It will allow us to outperform over the next couple of years. We call it unrecognized business momentum,” Bianchi said.
Financial Advisor Magazine reports fixed income investors believe that non-traditional debt offers “opportunities for both yield and total return” even in an environment of low interest rates and meager market returns. Voya Investment Management Senior Client Portfolio Manager Christian Wilson believes that illiquid assets can create opportunities “for nimble managers” and that he “runs a more opportunistic, unconstrained and fundamental fixed-income strategy for Voya.”
Voya Investment Management CIO of Fixed Income Matt Toms was on CNBC discussing interest rate expectations and their impact on markets. Toms said that Federal Reserve action would have a larger impact than earnings announcements this week, saying “we need the Fed to stay ahead of market expectations ... finally the Fed is not behind. It will cut this week then look for one more early next year. The key is to keep ahead of the market.”
Voya Investment Management Head of Securitized Fixed Income David Goodson was quoted by Reuters in an article looking at how investors are considering climate change risks in the mortgage market, with some concerned that the residential mortgage-backed securities (RMBS) market “has not yet priced in that risk,” especially in climate-vulnerable areas such as Florida and Texas.