Interest rates

SS&C Technologies: 4 investment strategies for rising interest rates

Following the trend of recent years, 2022 has been full of surprises, with fluctuating social, political and economic conditions creating an environment that requires extra attention and flexibility to respond to unexpected opportunities and trends. While higher return opportunities and a strong private market pipeline led investors to increase real asset allocations in 2021, several factors led to a pullback from traditional private market investment allocations for 2022.

With over 30 years of experience in insurance investment accounting, we have identified some key balance sheet risk information for an insurance investment portfolio, which translates into four investment strategies for the current environment of rising interest rates.

  • Floating rate bank loans – Less risky allocations like bank loans may be more defensible under uncertain conditions, especially in stable sectors like healthcare. The bank loan market is now almost as big as the high yield bond market.

  • Special Situations and Distressed Debt – Direct loans are considered a safe investment in times of extreme volatility, offering high rates of return even during economic downturns.

  • Swaptions, Currency Swaps, Cap and Floor Strategies – As interest rate differentials widen, currency swaps can protect portfolios from interest rate volatility.

  • Infrastructure and natural resources – While traditional commercial real estate investments have struggled as a result of the COVID-19 pandemic, investments in infrastructure and natural resources like energy and agriculture can offer protection against the downturn. inflation and other disturbances.

For a more detailed discussion of these strategies, along with specific examples, download our white paper, Four Investment Strategies for Insurers to Consider When Interest Rates Rise.

Insurance

investment strategy , private markets , interest rates

Disclaimer

SS&C Technologies Management Inc. published this content on November 14, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on November 14, 2022 22:01:24 UTC.