Investment - Articles - Interest and long term yields to fall before rising


More than half of fund managers expect both UK base rates and long term gilt yields to fall to between 0% and -0.5% within the next 5 years, according to a new survey. XPS surveyed Investment Fund Managers with assets under management totalling more than £1.6 trillion.

 Long term yields – which reflect the markets expectation of future interest rates – have fallen by 1% over the last 2 years, which has caused considerable challenges to pension scheme funding. XPS’ survey illustrates that record low interest rates and yields will provide no protection from the further falls in interest rates that fund managers expect.
 
 Head of Liability Driven Investment at XPS Mark Minnis said: “The belief that yields can’t go lower has been defied by experience time and again. With record low interest rates and already negative short term government bond yields, there is no reason why longer term yields will continue to remain above zero. This is not a market for pension schemes to speculate in, schemes should look to hedge as far as practically achievable”
  

Back to Index


Similar News to this Story

PIMFA calls for urgent reform of FSCS levy
PIMFA, the trade association for the wealth management and financial advice industry, is today calling on the Government and Financial Conduct Authori
Poll reveals scheme administrators views on sustainability
XPS’ Audience poll reveals half of scheme representatives believe the fiduciary duty hinders trustees in their ability to address climate change
Hymans Robertson advises on Aviva Staff Pension Scheme
The Aviva Staff Pension Scheme (the “Scheme”) has completed a £875 million buy-in with Aviva Life & Pensions UK Ltd (“Aviva”) covering the Scheme’s li

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.