Spotlight on Syed Zamil, Senior Investment Strategist, Insight Investment
Global Thought Leader Spotlight
Syed Zamil, Senior Investment Strategist, Insight Investment
In my role as the Senior Investment Strategist at Insight Investment, I am responsible for working with clients to bring them innovative fixed income solutions to their portfolios, drawing upon 30+ years of experience across equity, multi-asset and fixed income markets.
Within public fixed income, utilising a quantitative framework, I focus on markets that are more difficult to access, such as fallen angels, high yield, and emerging markets debt, where relatively high t-costs and low liquidity can prevent investors from attaining the full credit premium.
Key themes driving risks and opportunities
Fallen angels have delivered equity like returns at bond like risk. Over the past 20 years, total returns in this asset class have rivalled stocks. Fallen angels primarily comprises of the highest quality high yield bonds and yet, it has outpaced the broad high yield asset class by 2% per year, over this period. Further, with a yield of approximately 7%, fallen angels also offer an attractive income to investors. Being a publicly traded asset, fallen angels also offer a more liquid compliment than private investments.
Fallen angels are misunderstood and sometimes overlooked. Fallen angels, bonds downgraded from investment grade to high yield, suffer from a technical dislocation or, more bluntly, a technical sell-off, at the time of downgrade and thus offers investors an opportunity to capture the mispricing.
Fallen angels perform well in periods following elevated downgrades. When downgrades are elevated, the opportunity increases. More bonds get downgraded, which leads to more mispriced bonds, which leads to greater opportunities, generally.
After several years of muted downgrades, we believe more downgrades are coming, which should be a tailwind for fallen angels. Quantitative easing is over, and rates have normalised…which has resulted in higher refinancing costs.
BBB-bonds (lowest category of investment grade) are facing higher costs in servicing their debt (as measured by leverage, interest coverage ratio, etc.), which may lead to heightened downgrade activity.
Implications for institutional investors
Fallen angels offer investors access to higher quality high yield bonds that offer low defaults, attractive total return and yield potential. Against a backdrop of “tariff tantrum”, and a slowing economic backdrop, fallen angels offers diversification benefits to stocks, which can experience bouts of heightened volatility and extended periods of drawdowns.
From a risk perspective, fallen angels sits almost exactly in the middle of the efficient frontier between riskier assets like stocks and privates, and low risk assets like treasuries, and global aggregate bonds. As such we would submit that fallen angels can be a strategic holding in a diversified asset allocation framework.
Syed will be presenting at Global Investment Institute’s upcoming Family Office Investment Forum, taking place on Wednesday, 7 May 2025 at the Grand Hyatt Melbourne, Victoria. To register your interest in attending, click here or for more information email zlatan@globalii.com.au.
Syed Zamil, Senior Investment Strategist, Insight Investment
Syed is part of Insight’s Systematic Fixed Income team, based in San Francisco. In his role as a senior investment strategist, he has responsibility for bringing innovative solutions to client portfolios, understanding and articulating the opportunity available through systematic fixed income markets, and staying at the forefront of developments in quantitative fixed income trading.
Syed joined Insight Investment in September 2021, when Mellon Investment’s fixed income strategies formally joined Insight. He joined Mellon Investments in 2015, and began working in the industry in 1987.
Syed’s investment experience spans more than 30 years and across most asset classes. Syed began his career as a software developer at Vestek Systems before moving on to Barra where he helped institutional clients understand and incorporate multi-factor risk models. He then joined a start-up hedge fund Innovest Capital where he managed and traded long/short equity strategies for institutional and high net worth clients. Then he spent 10+ years at AXA Rosenberg as the Director of portfolio management followed by shorter stints at BlackRock and American Century investments as an investment strategist focusing on equity and multi-asset solutions.
Syed is a CFA charterholder and a member of the CFA Institute. He earned an MBA in Finance from San Francisco State University and a BA in Applied Math from the University of California at Berkeley.
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