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.
Allocating to multi-asset credit managers, who seek out alpha opportunities without constraint, can improve risk-adjusted returns for the average DB plan.
An alternative risk premia strategy is itself more diversified than a diversified growth fund or an all-equity portfolio.
Bond yields remain at or near historic lows around the world, leading to a substantial increase in the value of pension plan liabilities.
While tariffs remain a concern, the key issue is the degree—which we deem moderate—of U.S. recession risk. The current global backdrop makes the U.S. dollar unlikely to strengthen. Earnings growth expectations are modest, valuations are undemanding
How hedging against rising rates with credit—rather than sovereign bonds—can offer a better trade-off between liability-relative risk and return.
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