Investment Breakfast - Pure Relative Value investing as a defensive and diversifying lever for insurer’s core fixed income portfolios

An invitation for you to join the cio investment club and Ardea Investment Management at an Investment Breakfast on Thursday 10th October 2024 at 8:45am to 10:45am at Ten Trinity Club, Four Seasons, 10 Trinity Square, London EC3N 4AJ.

Insurance companies continue to weather challenging markets and heightened volatility across asset classes macroeconomic uncertainty given interest rate policy divergence across central banks. Whilst fixed income yields remain high, higher volatility in bond yields is leading insurance investors to diversify their core fixed income strategies into defensive and diversifying strategies which balance their exposure to investment grade credit and reduce the volatility of their portfolios.

Pure Relative Value investing does not rely on conventional fixed income sources of return and is not impacted by the level of bond yields regardless of whether they are high, low, or even negative. Nor is it reliant on corporate credit risk or a fund managers’ ability to forecast the direction of interest rates. Instead, a Pure Relative Value approach focuses on pricing inconsistencies between closely related securities. How does this work and why now? Given elevated macro uncertainty versus markets priced for perfection; high equity valuations/tight credit spreads versus the current broad relative value opportunity set, the defensive attributes of pure micro relative value including volatility control, negative correlation and how it behaves in stressed market environments can provide a valuable tool for insurers to deploy in core portfolios.