Absolute return was already popular in the Swiss city in the beginning of the year, but local fund selectors grappling with low bond yields increasingly are looking at absolute return products as an alternative to fixed income.
Long-only and non-flexible fixed income products are indeed not too popular among Zurich’s fund selectors. While emerging market debt is seen as a viable alternative to other fixed income categories with tighter spreads in some European countries, this is not the case in Zurich. Most private banks clients are conservative and therefore do not want their money to be invested in ‘exotic’ emerging market debt, local fund selectors told our researcher. On top of that, some fund selectors said they were being put off by default talk around Argentina and, lately, Venezuela.