Voya Investment Management Chief Compliance Officer Kevin Gleason writes in CIOReview that technology “is a key component of asset management, integral to many aspects of the investment process including: compliance, risk management, client service, research, trading, and operations.” Forward-looking companies have taken the next step, investing in artificial intelligence, machine learning and distributed ledger technology. Gleason writes that these new technologies can also impact the role of the chief compliance officer, as they become more efficient and effective by automating manual processes, managing third part oversight, improving audit trails and better maintaining records. Gleason cites four key areas where tech can improve compliance: portfolio compliance, vendor oversight, books and records and regulatory change oversight. By using technology to improve these key areas, compliance officers can move from being reactive to taking a more proactive stance.
The Commercial Observer (NY) reports covenant lite loans have returned to the bond market as competition for debt heats up, with borrowers successfully “pushing back on the protective covenants that keep lenders sleeping easy at night.” At a recent industry event, Voya Investment Management Head of Real Estate Finance Greg Michaud joined other panelists discussing the rise of covenant lite deals, which has resulted in some investors losing out on deals because they were uneasy about the lack of safeguards. Michaud said that Voya has been actively pursuing deals in the multifamily housing sector, though competing against companies like Freddie Mac and Fannie Mae has proven challenging.
Pensions & Investments reports that philanthropy has long been part of the asset management industry, as a recent poll by the publication has found that a commitment to “community service and volunteerism is nearly ubiquitous” across the sector. In addition to the social benefit, however, “money managers are finding that a philanthropic culture is an increasingly important factor in employee recruitment and retention.” Voya’s Christine Hurtsellers said that the company’s “extensive philanthropic program is making a favorable impression on its investment management clients,” with employees donating 42,000 hours to charity last year and the company offering 40 hours of annual paid time off for volunteerism. “I want people to get out of their offices and work on projects like building houses for Habitat for Humanity or Covenant House, a national agency that helps homeless youths,” Hurtseller said. “I want people to get to know each other.”
Pensions & Investments has published its 2019 Best Places To Work In Money Management report, with Voya ranked as #3 overall among managers with 500-999 employees. Describing what makes the company such a welcoming professional environment, Voya respondents wrote, “Employees like that they can make a tangible difference in how the company is run and how we serve our clients. In our surveys, employees use words like ‘empowered,’ ‘appreciated’ and ‘teamwork’ to describe our firm. Employees also like the fact that Voya truly believes in a healthy work-life balance. Senior management understands that staff have a life outside of Voya and ‘life happens.’”
On its terminal, Bloomberg reports that “corporate bond investors have been going long this year, and it’s paid off for them.” Debt with at least 10 years until maturity is up 24% this year through Friday “as money managers clamor for the extra yield available for buying longer-term securities. The bonds are on track for their best annual returns since 1995, and in 2019 accounted for the largest proportion of debt sales since the crisis.” Voya Investment Management Co-Head of Investment Grade Credit Travis King said of the market, “It’s hard to see inflation or election fears materializing right now, and that’s why investors are relatively comfortable. At these inflation and yield levels, it looks like there’s a window to get in and out of these things and see them perform well.”
Voya Investment Management CIO Paul Zemsky was on CNBC discussing equity markets and where they may be headed. Zemsky said Voya has been increasing its exposure to cyclical stocks, saying, “the economy is bottoming. We see green shoots in Europe, green shoots in EM, and we believe purchasing managers around the world are bottoming. That means you want to be more in cyclical stocks.” Looking ahead, Zemsky believes election-related uncertainty could be a challenge starting for U.S. equities in the second quarter, while he believes European assets offer more value. “Europe was pricing negative rates forever, and while we may have zero-ish negative rates, they’re not going to be negative-seventy basis points like we had just a few months ago ... as we see the world’s industrial activity bottoming, European companies should do well,” according to Zemsky.
Voya Investment Management Managing Director and Head of Insurance Solutions John Simone was quoted throughout a recent article in Best’s Insurance News & Analysis as part of the publication’s year-end roundtable, exploring how “the prolonged low rate environment is continuing to put pressure on portfolios.” Simone believes life insurers have a subdued outlook heading into 2020, as 10-year Treasury rates have fallen despite expectations for a climb. Looking at the macro environment, Best believes that that policy mistakes and the ongoing U.S./China trade war are the biggest threats, though he does not see a U.S. recession is imminent, arguing that “the U.S. economy is still quite strong. But that doesn’t mean when you’re talking to clients and their boards they’re not getting ready for it.”
Voya Financial Managing Director of Insurance Investment Solutions John Simone and Voya Investment Management Fixed Income Client Portfolio Manager Brett Cornwell are quoted throughout a PlanSponsor article exploring the lessons defined benefit (DB) plans can take from insurance companies. Simone believes that the DB sector can draw on the insurance sector’s experience managing low interest rates to deal with the late credit cycle. Cornwell notes that DB plans have been adding more fixed income assets to their portfolios and cycling out of equities, though an over-exposure to corporate debt may create different risk factors for DB plans to consider. To better diversify their risk positions, Cornwell believes DB plans should follow insurance companies by investing in a variety of securitized sectors that are “not as narrowly defined as what DB plans use.”
Hurtsellers: Recession Fears Overblown, Negative Sentiment Offers Buying Opportunities In The Market
Voya Investment Management CEO Christine Hurtsellers was on Bloomberg TV discussing major issues impacting markets including the risk of recession in the U.S. Hurtsellers said that “We felt all along that fears of the U.S. recession were really overdone. When you think about things that need to be in place for a darkening of the economic view, you really need the U.S. consumer to be fearful. When you think about wage growth and savings north of 8%, the U.S. consumer is in great shape.” Hurtsellers said that negative sentiment in developed global markets could make them a buying opportunity, while debt markets are likely to offer steady returns in the short term.
ETF reports that WisdomTree has launched “an actively managed fixed-income ETF focused on mortgage-backed securities that are backed by the U.S. government or its agencies,” with Voya Investment Management subadvising the new fund “using macro and fundamental research.” Voya Head of Securitized Debt Dave Goodson said of the new offering, “This is not a place that has been particularly well served to date, and we see the opportunity there. Part of it is that there are still scars from the Financial Crisis. Certainly I would have to concede to you that securitized products were at the core of it.” However, Goodson notes that securitized markets “are a much safer place” than they were a decade ago, saying, “as an investor in those markets … I feel better protected than I ever have been. The balance of factors right now points in favor of securitized. From a tactical standpoint even, we think it makes sense now to have an allocation to securitized products.”