Conning ConnText Podcast Suggests U.S. Economic Growth to Continue Through 2021 but Fiscal, Monetary Policy Raise Questions for Longer Term
May 11, 2021
Performance, Demand for Floating-Rate Product Driving Bank Loan/CLO Market
HARTFORD, CT – May 11, 2021 —Leading global investment management firm Conning has posted its latest Conning ConnText quarterly podcast which suggests that the U.S. economy should continue on its growth spurt at least through the end of the year. The podcast also notes that the rebound in the bank loan/CLO market reflects both the asset class’s solid fundamentals as well investor interest in strategies whose yields can rise should market interest rates climb.
Rich Sega, Conning’s Global Chief Investment Strategist and host of the podcast, said that 2021 is quickly making up for the pandemic-induced capital markets performance of 2020. He notes accommodative monetary policy and “heretofore unimaginable amounts of [fiscal] spending” are helping drive growth. The goal is to put cash into the hands of those hurt by last year’s lockdowns, rebuild businesses and fund infrastructure, Sega said. Will it drive long-term growth? “Good intentions all, but such largess has a checkered history of limited success,” Sega said.
As current fiscal and monetary policy are raising questions about inflation risks, it’s fitting that Rich’s guest on the podcast is Gretchen Lam, Managing Director and Senior Portfolio Manager of Octagon Credit Investors. Octagon is a Conning affiliate focused on below-investment-grade credit, much of it floating-rate, which investors have often turned to in previous periods of rising interest rates.
Lam reviews the rebound in the bank loan and CLO market following the challenges of 2020. She also noted that conditions for 2021 remain very strong, in part due to investor interest in floating-rate product. “Given the supportive macro backdrop, especially for the back half of 2021, it is our view that this very high level of issuance in both the loan and CLO markets is keeping spreads a bit higher than perhaps they otherwise would be, and this bodes well for investors in those assets.”
Conning (www.conning.com) ) is a leading investment management firm with almost $200 billion in global assets under management as of March 31, 2021.* With a long history of serving the insurance industry, Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.
*As of March 31, 2021, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited and Cathay Securities Investment Trust Co., Ltd. (“SITE”). SITE reports internally into Conning Asia Pacific Limited, but is a separate legal entity under Cathay Financial Holding Co., Ltd. which is the ultimate controlling parent of all Conning Holdings Limited controlled entities.
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