Identifying alternatives
Few people currently seem to know how to make money in the bond market, and Ford makes no grand claims in this regard. “The bond space is just perplexing, with low yield being problematic in terms of client outcomes. It is very difficult to find any returns when you have taken off an asset manager’s fees.
“There is an element of us all being driven up the risk curve, which is troubling. The risk/reward curve in the bonds market is not attractive. It requires good use of risk budgets to get the required client outcomes.”
The lack of spark in the bond market has not sent Ford running in the direction of hedge-fund managers and other alternatives providers though, as they too have their issues in his view. “In alternatives, we have a very limited exposure of around 5%. When we look at performance during the credit crunch of hedge funds, for example, we still think it is hard to make the case.
Property is one relatively bright spot though for Ford. He says: “We do have an interest and invest through Reits. There are some interesting opportunities in mid-tier properties that some of the bigger fund houses have not yet tapped into.”
