MarketWatch reports that airlines are starting to use frequent flyer programs as “collateral for bondholders.” Airlines are making the pledges against their programs because they can generate cash by selling frequent flyer miles to credit card issuers, who, in turn “offer them as part of their reward programs to their customers.” The article says that “the revenues earned from selling the miles” to credit card issuers “are much higher than the cost of any flight travel redeemed by passengers.” Voya Investment Management Fixed Income Portfolio Manager Cliff Andrus said, “The customer doesn’t realize the margins are quite high.” According to the article, “Even with reduced demand for air travel, the mileage programs still hold their value.” Andrus said, “You’re going out to spend money on your credit card, whether or not you’re flying.” According to some analysts, using frequent flier programs as collateral “represents a desperate move by airlines that are looking for any assets that they can pledge.”
Voya Investment Management LDI Strategist and Senior Actuary Oleg Gershkovich discusses “the challenges and opportunities that pension fund managers are facing today” in a video interview posted on the website of Pensions & Investments. During the interview, Gershkovich said that “the biggest challenge” to pension management in the next year “is resisting the temptation to rerisk in the pension plan.” Even though “we are seeing valuations at an all time high,” Gershkovich says that “plan sponsors need to exhibit a lot of caution before they decide to rerisk into their pension plans.”
Voya Investment Management Managing Director and Insurance Solutions Group Head John Simone, in a piece for Insurance Investor wrote, "Although private placements and commercial mortgage loans have long been 'core' allocations for life insurance companies, we are seeing demand from non-life insurance companies picking up significantly." According to Simone, "the hunt for high-quality yield due to historically low and lower rates is here to stay given the pandemic and the resulting central bank actions globally to keep rates low and apply a plethora of liquidity tools to ensure markets are functioning normally (i.e., TALF, buying publically traded corporate debt to name a few)." Simone added, "For selective investors, the market has provided attractive spreads to similar rated public corporate bonds and the quality of the deal flow, as measured by rating, has increased. This combination offers investors an attractive combination of increased spread with higher average credit quality."
Yahoo! Finance reports that the U.S. Department of Labor’s “proposed rule tightening requirements for socially-conscious investments in 401(k)s or other employer-sponsored plans shouldn’t be implemented, according to one expert.” Voya Investment Management CEO Christine Hurtsellers, in a recent segment on Yahoo’s The Final Round program, said, “When we surveyed our clients, 76% want their employer to consider ESG” principles in the 401(k) plans they offer. During her appearance on The Final Round, Hurtsellers also said, “When you think about ESG investments, as well, they’ve performed very well.” She added, “They’ve been in Europe for literally tens of years, and we have over ten years of data on how these assets or these investments have performed when you think about ESG.” According to Hurtsellers, “If you have a quality ESG find...it does outperform the broader market.”
Markets Media reports, “Tony Campos, director of ESG Americas at FTSE Russell, said in a blog that the index and data provider’s 2020 survey found that 63% of asset owners in North America said that they were either implementing or considering ESG, up from 39% in the last two years.” The surge of interest “in sustainable investment comes as the” U.S. “Department of Labor (DOL) has proposed preventing Employee Retirement Income Security Act (ERISA) plan fiduciaries from investing in ESG vehicles unless they represented ‘economic risks or opportunities that a qualified investment professional would treat as material economic considerations under accepted investment theories.’” In July, “Voya Financial ... submitted a comment letter to DOL expressing concerns that the proposal ignores the needs of retirement plan savers and would likely make it more difficult for plan sponsors to consider ESG factors in their evaluation of plan investment options.” Voya Investment Management CEO Christine Hurtsellers, in a statement, said, “Contrary to the DOL’s assertion, recent experience has shown that ESG investments can outperform broader markets, particularly in times of market stress. If adopted as proposed, we believe the proposal would have a chilling and negative impact on ESG investment activities that would otherwise benefit retirement plan savers.”
Pensions & Investments reports Voya spokesperson Kristopher Kagel confirmed that Voya Investment Management Managing Director and Head of Product Management and Development Bill Golden assumed Stephen Dougherty’s responsibilities as a managing director and head of structured assets and alternatives. Pensions & Investments mentions that “Dougherty was named global head of product at Aegon Asset Management.”
"The Final Round" on Yahoo! Finance! featured an interview with Voya Investment Management CEO Christine Hurtsellers. During the interview, Hurtsellers discussed the implications of the Department of Labor's (DOL) proposal to establish more stringent rules on environmental, social and governance (ESG) investment in retirement accounts. Hurtsellers said that in its proposal, the DOL "is putting a higher bar, or level of standard on somebody that is designing a" retirement "plan for their employees if they want to include ESG investments." Furthermore, Hurtsellers added that "we do not believe" that it "is in the best interest of plan participants" for the DOL "to single out ESG investments specifically in that way." According to Hurtsellers, the DOL "should not single out ESG investing as a higher bar for qualitative judgment that the plan" designer "or employer has to consider." Hurtsellers said a Voya survey that found 76% of the company's clients "want their employer to consider ESG" investments. In addition, Hurtsellers continued, 60% of those survey by Voya said they are "more likely to save if they have" ESG offerings in their plan.
Bloomberg TV What’d You Miss? featured an interview with Voya Investment Management CEO Christine Hurtsellers, who discussed her thoughts on stock market performance and macroeconomic trends. According to Hurtsellers, the U.S. “still has a long way to go before” the economy returns to its pre-pandemic level, especially as the unemployment rate remains above 10%. However, Hurtsellers said that the “underlying fundamentals and momentum” of the economy “are actually quite good,” with “retail spending rebounding,” and more activity on the restaurant-reservation platform OpenTable. When asked about the relative strength of the stock market, and if the Fed’s liquidity actions are obscuring some risks to investors, Hurtsellers answered, “I would say, for the most part, no,” adding that “when you peel back the covers and look deeper into the market ... we are still seeing a tale of two cities, meaning that” some sectors, such as commercial real estate “have really lagged.”
MarketWatch reports that “consumers drove the U.S. economy to its longest period of economic expansion in history – or at least until the pandemic hit.” According to MarketWatch, “That is something bond investors want policy makers in Washington to keep in mind as they haggle over another coronavirus aid package, and get down to the wire on the fate of the extra $600 a week CARES Act unemployment benefit that expires Friday.” Voya Head of Securitized Credit Dave Goodson said, “In an environment like this, and even before the economic slowdown, your most levered borrower has had to borrow to stay afloat, and already has been victimized by income inequality.” Goodson told MarketWatch that “the CARES Act was a godsend for those borrowers,” and “that it not only propped up struggling households, but also contributed to an eye popping rate of personal savings since February.” Goodson asked, “If we get caught up in a world of uncertainty, because both sides of the political aisle negotiate this aid package into oblivion, how are borrowers supposed to plan what to do next?” Such a scenario, Goodson continued, “could be a real recipe for disaster.”
Bloomberg TV What’d You Miss? featured an interview with Voya Senior Portfolio Manager and Asset Allocation Head Barbara Reinhard, who discussed her general expectations about the earnings season and longer-term market outlook. Reinhard said that “in terms of earnings expectations, you are starting to see revisions start to climb,” especially as the market is “really looking towards 2021.” She added that what investors should “focus on is central bank liquidity,” because that “drives asset prices.” Looking ahead, Reinhard said that Voya is focusing its portfolios “much more so on the U.S. than anywhere else in the rest of the world” and that “we do believe that the U.S. dollar is likely to take a respite from its recent declines.” Furthermore, Reinhard said that “there is no country in the world that has as much fiscal and monetary support as the U.S. does.” Reinhard added it’s for these reasons that “we think the U.S. is probably going to be the longer-term winner over the next one to two years while we’re still slugging it out with COVID.” Reinhard also commented that ultimately “we know it would come down” to federal government fiscal support to underpin U.S. markets. She said more fiscal supports are likely on the way because the high unemployment rate will force the federal government to act.