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The fund also found that investors were changing their analyses of these more risky equity markets, as they begin to invest based on specific industries, not just overall political considerations.
The share of risky equity appropriate for a huge national firm is surely different from that for a small local lender.Another approach would be to correct the distorted incentives one step further up the financial food chain with the rating agencies.
Knowing that their bonds could be converted into risky equity, the theory runs, big investors like insurers and pension funds would go through banks' books with a fine-tooth comb, spotting any leverage-pumping activities on the part of profit-hungry CEOs.
To put it another way: The earnings return on risky equity has to compete with the coupon return on safer bonds.
Similar(56)
The gilt market matters to retail investors because many of them have fled risky equities in favour of bond funds.
Hedge funds that buy the riskiest, "equity" tranche of these CDOs and borrow to do so have been hard hit.
While the riskiest ("equity") tranches are recovering from their mid-May low, they are far weaker than in the first quarter.
That has prompted some investors in I.P.O.'s, which are some of the riskiest equity deals around, to push for better terms from sellers and underwriters.
But the institutional investors who account for a larger portion of the money managed by BlackRock showed a renewed willingness to go into riskier equity, or stock-based products, which drew $22 billion of total new investment.
In the last eight months, the weak dollar has helped propel a dazzling rally in the stock markets, as investors moved their assets into riskier equity markets in the hope of higher returns.
Money that won't be needed for many years can be invested for the long term in riskier equity funds.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com