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

Shareholders challenge value of high risk acquisition deals
According to Willis Towers Watson’s latest Quarterly Deal Performance Monitor (QDPM) global M&A market performance was flat in the first quarter of 20
Virgin Money and Aberdeen Standard agree joint venture
The proposed joint venture will combine Virgin Money’s brand and retail distribution expertise with Aberdeen Standard Investment’s (ASI) strength in a
Bulk annuities has scope to use more market capacity
In 2017, the bulk annuity market took over £10bn of bulk annuity business from pension schemes for the fourth consecutive year, but did not see a new

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


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