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Europeans Snub Equities, Focus On Fixed-Income Markets

European institutional investors have lost their appetite for equities but have a growing hunger for fixed income, according to a new study by Greenwich Associates.

European institutional investors have lost their appetite for equities but have a growing hunger for fixed income, according to a new study by Greenwich Associates. The study found that institutional fixed-income assets under management surged 23% in 2005 from the previous year, as these investors expanded the number of dealer relations in less liquid fixed-income products including below-investment-grade credit bonds and emerging market bonds. This, according to Greenwich, helped push up cash compensation to fixed-income professionals by 11%. The survey found, however, increased interest in fixed income did not translate to expanded use of electronic fixed-income trading systems. European institutional investors also are showering the bond market, with high-grade credit bond holdings climbing 50% in the past year, while asset-backed securities and high-yield assets are rising 30% and holdings of emerging-market bonds are expanding by 25%.

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