In the new market environment, the management of institutional assets following the financial crisis requires new strategies to new problems. The investment choices that were considered safe in the past for the traditional institutional investor (i.e. sovereign debt, covered bonds and bank debentures) are now confronted by an array of challenging factors, not least an enduring low-yield environment compounded by weakness throughout the banking system and the vulnerability of sovereign credits to rating downgrades. A stumbling real economy impeded by a dearth of traditional bank financing is matched in the financial world by the growing pressure of regulatory responses, particularly the imposition of tighter constraints on capital. Faced with such uncertainties, investors are compelled to explore less familiar but more yield promising asset classes, particularly real assets such as infrastructure, renewable and real estate and, in the financial investment world, absolute return strategies, hedge funds and high- yield-bonds. However, with the search for yield in these “alternative investments” comes new complexity requiring, in many cases, very different aspects of know-how, booking infrastructure and investment methodologies.
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