Insitutional investors are finding it increasingly necessary to stretch the boundaries of fixed income assets, according to Fraser Lundie, global head of fixed income at Aviva Investors.

A shift in the correlation between rates and risk assets around 2021 and 2022 is pushing the need for investors to explore opportunities in emerging market debt, securitized bonds and hybrid bonds.

“These extra parts of the spectrum used to be ‘nice to have.’ I think [it’s] increasingly becoming a ‘need to have’ from the point of view of pension schemes, . . . they’re really grappling for that type of diversification and risk-adjusted return that they enjoyed.”

Read: Fixed income facing uneasy macroeconomic outlook in early 2026: expert

In 2026, Lundie has been following a shift in the role of credit investments for these investors given the more elevated yields, regardless of the........

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