Diversified Approach To ARP Key, Fixed Income Switch Justified

Amid a market environment characterized by low growth and rising interest rates, institutional investors in Europe have been increasingly allocating to alternative risk premia strategies, with Nordic pension funds, particularly, being labelled pioneers of the trend. Adopters of alternative risk premia in Europe that run absolute return investment portfolios are increasingly mixing strategies to build diversified portfolios by combining aggressive and defensive premia. One theme that is now emerging, meanwhile, is investors switching their fixed income exposures in to cross-asset risk premia exposures as concerns accelerate surrounding the performance of traditional investments in a rising rates environment. Rob McGlinchey gathered the thoughts of some of the early adopters of alternative risk premia in Europe on the latest approaches to the trend.