Pension funds and insurance companies have become minor players in the corporate debt market they used to own in the 1970s, Goldman Sachs has found.
From owning around 75% of the market in 1970, these institutional investors have fallen from prominence and now own roughly 30% between them of the $1.5 trillion market.
In 1970, pension funds owned around 32% of the market, with insurance companies dominating trading at 43% ownership. Now this split is less than 10% for pensions and roughly 20% for insurers.
The figures were published in a note researching the impact on the market of flows to and from retail and exchange-traded funds (ETFs), the US Federal Reserve’s positioning, and a lack of available inventory in the sector.
Due to the increasingly diversified ownership structure of the market, Goldman Sachs said commentary on these impacts had been overblown.
Mutual funds and ETFs have increased their hold on the sector, growing from around a 2% ownership to 15%. ETFs were responsible for just 11.5% of this amount, Goldman Sachs said, adding that this figure had been declining over the past two years.
The greatest increase since 1970 has been by “Rest of World” investors—that could include hedge funds, which are not listed elsewhere. This group has seen the largest pick up from under 5% to almost 20% in the last 44 years.
Banks have remained small players in the market, with a sustained ownership of around 5%.
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