Sovereign debt bucks trend as instos rotate from fixed income

InvestorDaily

While institutional investors continued their shift away from fixed income in December, flows into Australian government debt were the strongest in five years, according to State Street. The latest State Street Markets’ Institutional Investor Indicators showed a modest rise in risk appetite as investors rotated from fixed income into equities while cash allocations held steady. According to the firm, the index increased by 0.36 as institutional investors increased their equity allocation by nearly one basis point.  

It marks a rebound after November, when investors largely remained neutral and risk appetite fell 0.9 per cent amid the data blackout caused by the US government’s 42-day shutdown. That month, investors also avoided fixed income despite the uncertainty surrounding US economic data. At the same time, Australia could prove to be an outlier in the broader move away from fixed income. State Street found that appetite for sovereigns in the Asia-Pacific region remained “solid” for the month, with flows into Australian government debt reaching a five-year high.

The rest of this article can be found at investordaily.com.au.