Sovereign Wealth Themes: I Will Pay to Park My Cash

This report is available for download for SWFI subscribers. This report gives a brief overview and some possible solutions for public investors confronted in a low-yield fixed income environment.

What are sovereign wealth funds and public investors to do in this low and sometimes the case negative yield environment when it comes to fixed income investments? Three prolific contractions in world economic growth after the financial crisis were ameliorated by government policy tools. Bazooka rounds of fiscal stimulus and monetary expansion by central banks have staved off short-term pain, but have lengthened long-term strain. What is frightening is that policy responses whether fiscal or monetary seem to be less effective in invigorating private sector growth without adding to deficits. Interest rates could still fall further or remain extraordinary low, but for how long? This should be concerning for sovereign wealth funds, public pensions, official reserve managers, and other governmental investors.

Risk-averse investors are migrating towards G4 government bonds.

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