GLOBAL - Asset managers are making concerted efforts to reassure pension funds and other clients over their exposure to US sub-prime asset-backed securities.
Denis Gould, head of UK fixed income at AXA Investment Managers, said the firm had clients asking how their portfolios were performing in the current turmoil.
"We have been proactive in communicating, believing that it is natural for clients to want information about how they are affected by the unusual conditions," said Gould.
Keith Patton, head of fixed income, Europe, at Aberdeen Asset Management, added: "As there are a lot of conduits and a lot of structured products, it is not obvious what people own so most clients have been trying to find out whether we own any of the 'toxic debt' and we have none of that exposure at all. So, for our European clients, there are none of those issues."
He noted that while Aberdeen did have some exposure to mortgage-backed securities, they were AAA rated, putting them out of danger.
"[Even] if clients have not wanted reassurance, we have actively called them up and provided them with that reassurance,"said Patton.
Nicholas Bence-Trower, client director in UK institutional at Schroders, agreed: "It is something clients are keeping an eye on, and it is our job to keep them up to speed on unprecedented market conditions, so nothing comes as a shock to them."
In a circular sent out to Schroders clients, David Harris, product manager - US fixed income, explained the types of investments that had led to hedge fund failure and general stress in the fixed income market were not owned by Schroders funds.
"We do not own collateralised debt obligations, which can have high concentrations of risky or lower-rated loans. We have almost no subordinated (non-AAA rated) bonds issued after 2004, when mortgage underwriting standards were significantly relaxed," stated the circular.
"The funds are well-positioned and should not be significantly affected by sub-prime and/or hedge fund distress, though some mark-to-market risk is possible over the short run."
It would seem efforts on the part of asset managers to head off any worries over the sub-prime crisis have been successful: in response to this month's Global Pensions 100 Panel, which asked pension funds whether they were concerned about their direct or indirect exposure to the sub-prime crisis, 67% of respondents claimed to be unconcerned, while only 21% admitted to being worried.
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