Additional Tier 1 (AT1) bonds – also known as ‘CoCos’ – have consistently been one of the highest yielding asset classes to be found anywhere in fixed income, but they remain poorly understood by many across the global investor base.
In this unique virtual event from TwentyFour Asset Management, TwentyFour CEO Mark Holman will be your guide through the AT1 market as we discover what role he thinks these bonds can play in a fixed income portfolio.
Mark will be joined by Lee Street, Managing Director at Citi, who will help us understand why these bonds exist in the first place and update us on fundamentals across the banking sector. Mark will also be joined by fellow TwentyFour portfolio manager Gary Kirk, who will explain how AT1s can fit into a bond portfolio, how an investor might evaluates an AT1 deal and where he sees the opportunities currently.
Past performance does not guarantee future results and that current performance of a given security may be lower or higher than the index or example securities’ performance quoted.
On-demand content
Please find access to the replays of our most recent events below.
May 20th, 2021
Inflation and Fixed Income: Threat and Opportunity
Inflation fears have been a major driver for financial markets in 2021, with a damaging shift higher in US Treasury yields in particular showing investors’ concern that strong growth and price rises as the global economy opens up could prompt central banks to tighten policy sooner than expected.
But what does inflation actually mean for bond investors? TwentyFour partners Gordon Shannon, Doug Charleston and Felipe Villarroel sit down to debate its potential impact on the fixed income universe, from government bonds and investment grade credit through to ABS and high yield.
In TwentyFour's Vontobel Fund - Sustainable Short Term Bond Income update, Partner and Portfolio Manager, Chris Bowie provided an update on investment themes and positioning for Vontobel Fund - TwentyFour Sustainable Short Term Bond Income.
In TwentyFour's Investment Grade update, Partner and Portfolio Manager Chris Bowie provided an update on investment themes and positioning in the Investment Grade market.
In TwentyFour's Multi-Sector Bond update, Partner & Portfolio Manager Eoin Walsh provided an update on investment themes and positioning in the fixed income market.
The fixed income landscape has shifted rapidly in 2021, with the prospect of a strong economic recovery from the shock of COVID-19 sparking a sustained sell-off in longer dated government bonds, hurting portfolios running higher duration in particular.
In TwentyFour's quarterly update, Mark Holman discussed his outlook for the bellwether US Treasury curve, and explained how he thinks investors can still look to pick up yield while avoiding traditionally more rate-sensitive markets.
One of our favoured fixed income sectors for 2021 is financials where we believe banks and insurance bonds can offer investors credit spread contraction and overall relative value opportunities.
As we have previously mentioned, our belief was that banks would have to prove their resilience through a whole economic cycle before investors would start to become fully comfortable with the asset class. Following the onset of the pandemic this now being illustrated and the recent regulatory curtailment of equity distribution has only added to the value that we think bank capital bonds can currently offer. Despite these factors, most bonds in the subordinated banking sector continue to trade at a premium, which we believe will gradually erode as the economic recovery continues over the medium term.
Similarly, the insurance sector is viewed with a degree of wariness by some investors, given the cyclical nature and high level of fixed income assets held on insurance company balance sheets, resulting in the sector typically showing a relatively high level of volatility in periods of economic stress. Despite robust balance sheets and relatively high credit ratings this sub-sector still frequently offers a credit spread premium compared to other fixed income corporate sectors of similar rating quality.
In this virtual session, Partners & Portfolio Managers Gary Kirk & Gordon Shannon will share their views on the current opportunities within financials. The session will be structured around a number of topics, including:
The return opportunities within financials currently from a valuation / yield perspective
How to embrace pro-cyclicality within banks & insurance
Vontobel Fund - TwentyFour Sustainable Short Term Bond Income
Interest in ESG strategies has grown rapidly in recent years as investors have looked for ways to ensure their investments can have a positive societal impact. While fixed income ESG investing has traditionally lagged behind the equity market, demand has increased recently as investors have recognised the importance bond markets can also have in helping to promote sustainability and how they can influence a company’s overall cost of capital.
In this virtual session, Chris Bowie (Partner & Portfolio Manager) introduces our sustainable, short duration credit fund; ‘Vontobel Fund - TwentyFour Sustainable Short Term Bond Income’. Launched in January 2020 and now GBP 80m in size, the Fund is designed for investors looking for low volatility income with a focus on sustainability. Chris describes the quantitative work carried out ahead of launch, provides examples of ‘Observatory’ - our proprietary ESG scoring and engagement database and takes a look at portfolio positioning.
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