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For centuries, companies and their banks have financed the payment terms under commercial contracts – with this risk traditionally sitting either on corporate balance sheets or with the bank.
Constraints on bank capital and increasing economic activity, however, have created a funding gap estimated at $5trn (£3.84trn). Yet, at the same time as this, financial technology and market standardisation has allowed external investors to access the area of trade finance and help bridge this shortfall
The opportunity for pension schemes is significant, with trade finance assets offering an attractive risk-return profile and a potential alternative to short-dated credit and cash – with these additional returns generated through the complexity premium of trade finance rather than additional risk.
Trade finance also offers low correlation to traditional asset classes as well as low volatility and significant downside protection as evidenced in the most recent market downturns. Trade finance is also an important means to achieve the UN SDGs and can provide an attractive opportunity set for investors to target ESG impact.
This Webinar will examine the asset class in more depth – looking at how trade finance works; the way the asset class can serve as a diversifying, ultra-short allocation within pension scheme portfolios; and assessing how such assets can fit within a pension scheme’s broader portfolio.
CIO Global High Yield | Head of Public & Private Solutions, Allianz Global InvestorsView Bio
David Newman is a CIO within Allianz Global Investors’ Fixed Income team. David manages traditional Global High Yield, Emerging Market Corporate and Global Multi Asset Credit portfolios and has been responsible for these strategies since inception. David also co-manages our trade finance strategy and he spearheaded AllianzGI’s approach to trade finance; combining the complexity premium with a steady fixed income approach for institutional investors. Building on his cross-asset class experience, David is responsible for developing AGI’s public/private solutions.
Previously David was Managing Director, Head of Fixed Income Credit Research and Co-Head Credit Trading at Citigroup. Prior to that, he was Head of High Yield Credit Research at UBS. David has 32 years’ industry experience and holds a MBA with Cass Business School in the UK and a BA with honours in Geography from University College London in the UK.
Jonathan is editor of Professional Pensions and has been reporting on UK occupational pensions since 2001. He has won a number of awards during his career, most recently the SPP Trade Journalist of the Year Award in 2019. He is also holder of the PMI's Retirement Provision Certificate.