As a bunch, how have you ever been boosting your funding capabilities, together with profiting from technological advances in areas like AI?
Aegon Asset Administration (Aegon AM) is at present progressing technological advances, together with Generative AI (GenAI). We want to make use of GenAI to empower a few of our analysts on our various mounted earnings & structured group. Without having a cloth influence on funding choices, it is anticipated to assist their analysis course of by decreasing the time spent in addition to probably uncovering difficult-to-find info. We anticipate that the learnings from this instance could also be utilized to different eventualities throughout the agency as soon as they’re developed. We are going to proceed to research how we are able to drive efficiencies and productiveness positive factors from the adoption of GenAI capabilities.
What do you see as the large alternatives and dangers for traders in 2025? How are you responding to those in a selected technique?
Fastened earnings markets in 2025 might be dominated by the evolving macroeconomic backdrop – delicate touchdown vs onerous touchdown – and what this implies for the easing cycles of the main Central Banks. Inflation, as a driver of each market volatility and financial coverage, might be a lot much less of a function, with progress changing into the important thing focus.
Our central view is for a moderation in progress with inflation shut sufficient to Central Financial institution goal ranges that they’ll proceed to chop charges by way of 2025. Crucially, the danger to this view is skewed to the draw back; the place progress slows extra sharply and rates of interest have to be lower by greater than at present anticipated. This could be supportive for mounted earnings returns however would require an lively strategy to realize the most effective risk-adjusted returns. There are three key positions we’d deal with to make the most of this outlook: elevated period, steeper yield curves, and funding grade company bonds.
Length danger has traditionally carried out properly within the first 12 months of a charge reducing cycle; given our bias in the direction of draw back vs upside dangers, this helps a desire for having extra, fairly than much less, rate of interest danger. Given how flat yield curves are, the macro backdrop and rising political/fiscal issues favour publicity to shorter-dated bonds – we count on them to outperform longer-dated bonds as yield curves steepen. Lastly, funding grade company bonds supply a pretty yield for the credit score danger you’re taking – and if the financial image was to darken, they need to be comparatively properly protected.
The important thing danger to the outlook would come from a reacceleration of inflation that stops the easing cycle in its tracks. For that motive, the potential influence of commerce tariffs and geopolitical danger must be watched intently because the 12 months progresses.
What are your priorities as an asset supervisor for the 12 months forward?
There are three essential priorities for the 12 months forward:
i. LTAF Funding Answer Launch
We’re making ready to launch our Lengthy-Time period Asset Fund (LTAF) answer by the top of H1 or the beginning of H2 2025. This may supply new alternatives for long-term traders whereas assembly regulatory requirements.
ii. Momentum in High-Performing Asset Lessons
We are going to proceed to construct on the momentum inside our top-performing asset lessons, capitalising on sturdy market positions to ship optimum efficiency for our purchasers.
iii. Aegon for Earnings
Our enterprise stays firmly targeted on producing sustainable earnings for our purchasers, a cornerstone of our strategy in immediately’s evolving markets.
Moreover, we’ll deepen our dedication to accountable funding by additional integrating ESG elements and sustaining our lively credit score administration to successfully handle danger and seize alternatives.
These priorities place us to ship constant worth and meet the evolving wants of our purchasers.
Essential info
All knowledge is sourced to Aegon Asset Administration until in any other case acknowledged. The doc is correct on the time of writing however is topic to vary with out discover.
Aegon Asset Administration UK plc is authorised and controlled by the Monetary Conduct Authority.
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