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3 Ways Asset Owners Are Preparing for Slower Global Growth in Fixed Income

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Last week, the Organization for Economic Co-operation and Development (OECD) lowered its estimate on worldwide gross domestic product for a second time in three months. OECD forecasted the global economy would grow by 2.9% versus 3% this year – and a lower 3.3% in 2016 from 3.6%. A major reason for the revised projection is the deceleration of China’s economic engine and its impact on emerging markets. In the OECD’s latest Economic Outlook No. 98, “China’s transition from infrastructure investment and manufacturing and towards consumption and services is one important reason for the decline in commodity prices, and may be reducing its role in global value chains as well.”

Some sovereign funds are attracted to U.S. credit spreads given low-expected returns estimated for traditional bond investments. In addition, many pension economists predict a slurry of U.S. corporate bond defaults. On November 13th, Fitch Ratings released the energy trailing 12-month default rate for October. It was at 5.3%, the highest point since a peak of 9.7% back in 1999.

The large in-house asset owners like OMERS and the Abu Dhabi Investment Authority (ADIA) have extensive capabilities with their fixed income teams.

#1. Continued Thirst for Yield

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Central Huijin Unit Eyes J&J Diabetes Business

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Sovereign wealth funds have increased their appetite for healthcare-related investments, according to a recent report issued by SWFI research. Johnson & Johnson (J&J), for a while, have been contemplating on possibly selling its diabetes care businesses. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Follow the Money – Episode 45

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This longer-than-normal episode covers a wide range of issues including such as sovereign wealth funds, bitcoin, cryptocurrencies, Indian real estate, ESG, investment exclusions, central banking and more.

EPISODE 45

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The views in this media are expressed by Michael Maduell and other participants and are not reflective of the Sovereign Wealth Fund Institute (SWFI).

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CalPERS Board Elects Priya Mathur as Board President

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The board of the California Public Employees’ Retirement System (CalPERS) elected Priya Mathur as board president. The current president Rob Feckner was named vice president of the board. Feckner previously served as board president and vice president.

Priya Mathur is serving her fourth term on the CalPERS Board of Administration. Mathur is a principal financial analyst for Bay Area Rapid Transit District (BART). Mathur represents public employees on the CalPERS Board, which she joined in 2002. She currently serves on four committees: Governance, Investment, Pension & Health Benefits, and Risk & Audit. She chairs the Pension & Health Benefits Committee and is vice chair of the Governance Committee.

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