Credit magazine has carried out an industry-wide investor survey, profiling the leading firms in the credit market across the spectrum of credit products. Importantly, focus has been placed on investors - portfolio managers and fund managers - those making active decisions, rather than analysts. The firms are all UK-based on the buy-side, and at all times the goal has been to seek out those on the front line of credit investment today. A set of carefully chosen questions (see over for full list), designed to assess all aspects of market activity, market robustness and investor sentiment, was put to all participants. For a detailed breakdown of participants' responses to each question, turn to page 36.
All firms had significant credit holdings with assets under management ranging from £410 billion (with £205 billion in fixed income) to around £100 million in credit alone. The range of products invested in was wide and covered the gamut of credit: gilts, corporate bonds, CDS, loans, from classic long-only to absolute return, emerging markets, foreign exchange to name but a few. Especially popular among the leading credit outfits was investment grade credit, which has benefited from concerns over rising default rates in lower-rated corporates.
Importantly, all but three of the investors profiled had no mandate restrictions on what products they could invest in. Any restrictions in place were largely down to client preference. The name of the game among the market leaders is clearly variety and flexibility.
The goal of the survey has been to assess the market from those at the heart of UK credit. Investor confidence in differing asset classes, feeling on government regulation and belief about the industry's prospects have all been examined to gain as clear a picture about the state of credit as a whole going into 2009.
Research and feature by David Patrikarakos.