Investment Overview

Pension plans typically need a combination of growth assets and fixed income in order to meet funding goals.  Our team has a significant focus on designing and managing diversified portfolios that center on pension liabilities. Managing liability-driven portfolios begins with a thorough understanding of the pension plan’s liabilities and objectives. We solve for the return needs of the plan by analyzing minimum contribution requirements, the liability growth rate and the plan’s funded status. The size of the plan relative to the sponsor, the sponsor’s own financial circumstances, and the target end-game are important factors in determining the risk tolerance and appropriate allocation to hedging and growth assets. We access our broad range of investment building blocks to create custom solutions to meet a range of pension objectives.

Investment Approach

Liability-driven solutions apply J.P. Morgan’s active allocation views across asset classes and strategies. The hedge portfolio typically consists of long duration government and credit instruments, while the growth portfolio will diversify across equity, extended credit and alternative strategies.

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Clients may task us with monitoring their funded status and adhering to a disciplined process to adjust the asset mix.  As the funded ratio improves, the portfolio will shift toward a higher hedge allocation and therefore the pension surplus risk will decrease. This service is often referred to as “glide path” management.
 
For more information on our fixed income LDI strategy, click here.