This quarterly publication from our Pension Solutions and Advisory Group provides UK pension funds with timely updates on market trends, funding levels and the latest industry and product developments.
Caught our eye: UK pension buy and maintain strategies could bring demand pressure to sterling corporate bonds
In an already tightly held market for sterling corporate bonds, even modest moves by UK pension funds to adopt buy and maintain strategies could create stiff competition for these assets.
UK pension plans concerned about how to invest in a volatile, late cycle environment may want to consider two practices: continue effective rebalancing and don’t postpone further duration hedging in anticipation of rising rates.
Pension funds don’t face the many constraints that make buy and maintain strategies so well-suited to insurers, and can make use of these freedoms when designing portfolios to meet the liability-aware investment needs of pension funds.
Core infrastructure’s growing role in institutional portfolios
LTCMA Time Frame
Bond yields remain at or near historic lows around the world, leading to a substantial increase in the value of pension plan liabilities.
Many UK defined benefit (DB) pension funds are well along on their de-risking journey. What lies ahead now is relatively unexplored territory. Here we set out things to consider in building a runoff investment strategy.
Using our 2019 Long-Term Capital Markets Assumptions and our estimate of the average current pension profile, we projected forward the buyout position of the average UK pension scheme.
We further discuss how institutional investors can protect their portfolios from late cycle headwinds and rising volatility so that they can be positioned for long-term success.