Investment - Articles - More than equities and bonds to sustain growth


Quantum Advisory has stressed that greater consideration must be given to long as well as short term objectives when investing to secure the lasting health of schemes.

 Rhidian Williams, Partner at Quantum Advisory, said: “We are currently in a low interest rate environment which has challenged pension scheme funding, and in fact in September 2016 we hit an all-time historic low in gilt yields. As these low interest rates have continued to push up scheme deficits, it is no surprise that many trustees are feeling the pressure to meet their liabilities. With more and more people in Defined Benefit (DB) schemes about to reach retirement age, benefit outgoings are on the rise and schemes need to be certain that their investment strategy is still fit for purpose. 

 “However, it is not all quite as bleak as it may first appear. Schemes should look at where and how they are invested to generate reasonable long term growth to meet their future liabilities. Many will still simply ‘default’ to Bonds as it will match the liabilities, but this could well result in locking in today’s problems. Re-risking, or at least looking to spend your risk budget more wisely, is an alternative view that schemes should be considering to create sustained growth.”

 Williams continued: “There are a significant number of growth opportunities in many different asset classes. For example in diversified or absolute return funds - they are more managed and have lower risk volatility. Another example is Infrastructure funds that are also often known to good cashflow returns. Smart use of Liability Driven Investment can help to free up assets to invest in balanced growth opportunities in conjunction with meeting your liabilities. It’s all about finding ways to spend your investment risk budget more wisely.”
  

Back to Index


Similar News to this Story

Systemic risk brings echoes of 2007
Arif Husain, head of International Fixed Income at T. Rowe Price says that risks to the global economy are building.
PLSA responds to FCA on rejecting the UIL
The Pensions and Lifetime Savings Association (PLSA) has responded to the FCA’s consultation on its provisional view to reject the Undertakings in Lie
Insurers need to focus on historic loss funds
Insurance services firm Ambant Limited believes insurers need to focus on the legacy issues around loss funds in order to secure the return of sums in

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.