Voya Investment Management Head of Asset Allocation Barbara Reinhard was on CNBC discussing the recently-released Federal Reserve Open Market Committee meeting minutes. According to Reinhard, there is little threat of inflation despite a patient Fed. She said, “[I]t’s an accomodative turn from last year, and there’s a high hurdle for the Fed to cut interest rates at this point. That’s why the market has been pricing in a Fed cut at this point – about 40 basis points ... in our view, the signs of inflation just don’t seem to be there.” Reinhard cited the NFIB survey indicating inflation is not a major concern for small businesses, while pointing out that “the Fed has said they would like to see inflation run a little bit above their target to try to hit that target in the long term.”
Voya Financial’s Dave Goodson and Mohamed Basma write in Financial Advisor Magazine that collateralized loan obligations (CLOs) have been “cast as the villain most likely to bring the global economic system to its knees” in the next economic downturn, though Goodson and Basma argue that a better gauge of risk requires “a deep understanding of the different instruments used to gain corporate credit exposure.”
Bloomberg reports hedge funds and asset managers “are resurrecting collateralized debt obligations (CDOs) that bundle risky bonds and loans into new, higher-rated securities.” Even though the assets “blew up during the financial crisis,” proponents argue that improved quality of underlying debt means CDOs should be well placed to weather the next economic downturn and drive profits in a down market. Not all investors are convinced CDOs will hold up during the next recession, however, with Voya Investment Management Head of Securitized Products David Goodson saying, “We’re not advocating adding them, generally speaking, in our general accounts. We’ve seen some things that we think are pushing the envelope.”
International Financing Review reports “single-asset and single-borrower CMBS deals are accounting for a high proportion of activity in the market, as conduit refinancing slows and lenders face competition for assets.” Investors note that they often prefer single asset over multi-borrower deals due to their simplicity, making them easier to underwrite. Voya Investment Management Head of Securitized Credit Dave Goodson said, “Single-asset deals are so much easier to underwrite – it’s one borrower, or one property, and it’s so much easier to get your head around that. Relative to conduit, you’re usually willing to accept less spread, because you can understand the risk more easily. It’s often something closer to a trophy asset, or otherwise more vanilla, so it’s become a more efficient funding model and it’s often easier for the street to sell deals.”
The International Financing Review quotes Dave Goodson, head of securitized credit at Voya Investment Management, saying, “The street was pretty light on their inventories going into the quarter, so (dealers) have room to absorb risk.” Goodson added, “What we’ve seen so far this quarter tells us there’s a lot of money everywhere – secondary markets are almost as lively as primary.”
Financial Planning reports Money Management Executive has announced the winners of its 2019 Top Women in Asset Management Awards, with Voya Investment Management Head of Product and Marketing Strategy Dina Santoro named to the list. Additional details and full profile of the winners are expected in the magazine’s May edition.
Voya Investment Management Head of Asset Allocation Barbara Reinhard was recently on Bloomberg discussing market volatility, China, and last week’s late-stage rally. Looking at the recent stock market recovery from December lows, Reinhard said Voya believes markets are overbought. She said that “to have had the significant rally that we’ve seen in U.S. equities, which are up 18 percent from recent lows...it’s not unusual to see these types of pullbacks.”
Financial Planning’s Money Management Executive unveiled its list of the Top 10 Fund Managers To Watch for 2019, including Voya Investment Management Chief Investment Officer Matt Toms. According to the article, Toms “leads a team of over 100 investment professionals” and brings extensive experience “overseeing the investment teams responsible for investment grade corporate debt, high-yield corporate debt, structured products, mortgage-backed securities, emerging markets debt and money market strategies for the firm’s general account and third-party business.” Toms offered his insights into the changing nature of the fund management industry, specifically how technology is changing operations. “Technology has disrupted our relationship with waiting. A long-term investment mindset used to mean you thought beyond the quarter. Now [it] seems to mean you think beyond next Tuesday,” Toms said.
Bloomberg News reports, “U.S. corporate debt rated BB...is now looking overpriced by at least one measure as investors pour money into higher yielding debt.” Voya Investment Management’s senior high-yield portfolio manager Randall Parrish said, “Given the strong performance of BBs to start the year and the low yield they offer, and given that BBBs are relatively wide versus A rated, we believe the BBB-BB spread is too tight and prefer BBBs.”
In an interview with CNBC’s Squawk Box, Voya Investment Management’s head of asset allocation Barbara Reinhard said that while a tentative deal to avert another U.S. government shutdown is “certainly a relief to the market,” it’s “not the only worry that the market has.” With regard to ongoing U.S.-China trade talks, Reinhard said the Trump Administration “certainly has seen the effects of a potential raising of tariffs on China. It would be far less benign than they probably thought it would have been maybe a year ago and...this is likely to be an issue the markets are going to have to contend with not this year, not next year, but probably for the next decade.”