Conning ConnText Podcast Offers Optimistic Economic Outlook for 2022; Spread Sectors May Be Better Fixed-Income Opportunities for Insurers
February 10, 2022
Geopolitical Issues, Fed Policy Are Concerns
HARTFORD, CT – February 10, 2022 —Leading global investment management firm Conning has posted its latest Conning ConnText quarterly podcast which offers an optimistic outlook for economic conditions in 2022, although concerns remain over geopolitical hot spots and the U.S. Federal Reserve’s inflation-fighting policy. The podcast also discusses the impact on a variety of asset classes common to many insurance company investment portfolios, with spread sectors appearing to offer greater opportunities in the year ahead.
Rich Sega, Conning’s Global Chief Investment Strategist and host of the podcast, said that the improving fundamentals that drove the economic rebound of 2021 should continue into the new year. Most central banks around the world have plans to address inflation, U.S. fiscal policy has stabilized and tax policy remains supportive of growth. However, “we need continuing capex and innovation to maintain the expansion,” Sega notes. “A big risk here is that [the Fed] overreacts and stifles the recovery, a risk that’s magnified by potential omicron flare-ups causing workforce absenteeism, and the geopolitical tensions mounting in Ukraine and Taiwan.”
Rising interest rates are already being reflected in treasury yields which is good news for income-oriented investors like insurers, said Cindy Beaulieu, chair of Conning Investment Policy Committee. “However, given our view that we continue to see solid fundamentals across nearly all sectors, we see value in spread sectors and therefore retain our underweight recommendation for treasuries.”
The volatility that welcomed 2022 may remain throughout much of the first half of the year, Beaulieu added. “Despite the volatility in both interest rates and equity markets, spreads have remained relatively resilient to this point, but we would view widening of spreads as an opportunity to add incremental yield and stand ready to shift strategy should we see spreads widen,” she said.
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Conning (www.conning.com) is a leading investment management firm with approximately $215 billion in global assets under management as of December 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 December 31, 2021, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited (CHL) and Cathay Securities Investment Trust Co., Ltd. (SITE). SITE is a separate entity under Cathay Financial Holdings Co., Ltd which is the ultimate controlling parent of all Conning entities. The CHL CEO sits on the Board of SITE and helps oversee the business.
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