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Borrowers on floating rates are also feeling pain. But money market funds and catastrophe bonds still have fans
...The rate increases have helped the lenders earn bumper revenues from their floating-rate loans and accumulate extra income from funds trapped in Russian deposit accounts....
...The New York-based company estimated it earned net income of about $2.7bn in the quarter, giving it a net profit margin of more than 60 per cent....
...The chancellor has a “secret project list” of potential revenue-raising measures for the exchequer, according to Treasury insiders, as he looks for ways to fund cuts to national insurance or income tax rates...
...As Lex wrote, “the tension between fund investors, public shareholders and employees creates a high-wire act” for them. At the other end of the fund management spectrum sits Abrdn....
...Many have a high proportion of floating-rate debt which has been adversely affected by rising rates. These entities now face higher interest rate costs, sometimes in double digits....
...But fixed income ETF flows fell from €14.1bn in the last quarter of 2023 to €8.8bn of net inflows in the first quarter of 2024....
...Most private credit loans come with floating interest rates that are tied to benchmark rates. That offers protection against inflation, unlike fixed income securities....
...The Fed on Wednesday kept interest rates unchanged at their 22-year high of 5.25 to 5.5 per cent, and repeated earlier projections of three quarter percentage point cuts this year....
...The continued popularity of income-generating ETFs, active fixed income ETFs amid interest-rate uncertainty and financial adviser interest in core strategies from firms such as Capital Group and JPMorgan...
...Using a cash fund to pay income in the short term, say two to five years, could help too....
...Greek banks, with floating loans and sticky deposits, have benefited from rising interest rates. They may be less sensitive to the coming downcycle....
...“From our vantage point, investors have been putting inflows into Treasury floating rate notes,” says Kevin Flanagan, head of fixed income strategy at WisdomTree....
...Net income was still better than analysts were expecting, however....
...The quick ascent of short-term interest rates since 2022, amid high inflation and resilient economic growth, has put borrowing costs in developed markets at multi-decade highs....
...However, net inflows of $57bn disappointed, as investors remain cautious about leaving cash to go back into equity and debt markets while the US Federal Reserve keeps interest rates at a 23-year high....
...Hedge fund drama on the high seas I twisted the arm of my excellent colleague Costas Mourselas into boiling down the intriguing story he did last week with Robert Wright, about two things that never seem...
...VCTs offer investors up to 30 per cent income tax relief on investments up to £200,000 per year, and tax-exempted dividends....
...high?...
...The Macquarie Income Opportunities ETF is benchmarked against the Bloomberg AusBond Bank Bill Index and invests primarily in a wide range of domestic and global investment grade floating and fixed rate instruments...
...It underscores the financial risk Blackstone assumed to draw UC’s investment by promising high returns on property investments hit by rising interest rates....
...The likes of JEPI “were built for a time when rates were very low or zero. They used the equity markets to get income that you couldn’t get from fixed income....
...When we talk to the middle-income people they are liquidating as they need money,” he says. That creates a dilemma for the western armchair investor....
...High and volatile US treasury yields — which underpin pricing in financial markets — risk adding to global rate pressures....
...Overseas development assistance budgets, which rich countries typically use to allocate cash for development banks and multilateral funds, rose to a historic high last year, according to OECD data released...
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