With equity markets selling off again in March and risk-free rates declining once more, discovering any asset class with positive returns and a low default rate could be of interest to institutional investors.
The Trade Finance: A Promising New Asset Class for Institutional Investors report produced by Greenwich Associates on behalf of EFA Group, points out that trade finance offers the possibility of between 3.5% and 5% net returns.
Does that compensate for the risk? The ICC Trade Register 2017 finds that between 2008 and 2016 the default rate on import letters of credit stood at 0.38%,
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