Budget airlines: not quite so budget

I’ve recently been looking at booking a skiing trip. Firstly, I need to find a resort to ski in, and then I need to arrange how I’m going to get there. As I’m not that long out of university, I’ll be looking to travel as cheaply as possible! Naturally a budget airline fits the bill….

It’s not what you say, it’s the way that you say it

In my last blog I talked about how things that at first seem intimidating usually do not turn out to be as scary. I have been faced with this challenge at university and now in work. When people ask me what I do, I have to think really carefully about how I answer. Mentioning the…

Not so scary…

We wrote last week about “national derivatives misconceptions week” – a period that started with something scary and ended with an explosion. This reminds me a little of my first experience at the PLSA. It started with doing something scary: going to the PLSA itself (my first industry event). It fortunately ended without an explosion,…

Derivatives misconceptions week

Last week started with Halloween and ended with fireworks. A week that begins with doing something scary and ends with an explosion. Maybe we should rename this week and have an annual event called “national derivatives misconceptions week”? Most people who are new to derivatives will have two worries: They are “complicated” and scary They…

Diseconomies of scale

It is often assumed that small schemes (those less than £500m) will always struggle, due to their limited resources, to compete performance wise with their bigger counterparts. Recently published research by Goldman Sachs Asset Management has shown that the big difference in performance (given the fall in interest rates) is due to whether a scheme…

Complexity is a perception

Many readers will be familiar with the challenge of office temperature. Some team members think the office is too hot, and others too cold. It suggests that our experience of temperature is based on perception rather than reality. As an experiment, try the following: Fill a bowl with tap water Put one hand under a…

A biomedical student in the city

As a student on placement, my first week working on LDI could not have been more different from my university lifestyle; this is especially the case given my term time “9 to 5” is reading biomedical science. For the past two years I have been discovering first-hand the medical improvements that, one by one, are…

Learn to love leverage

Apologies for the provocative title. Many schemes that are looking at, or that already have, LDI inevitably come across the word ‘leverage’. Scary, right? In the context of LDI it is often defined as the amount of liabilities you are hedging, against the (off-risk in Cash or Gilts) capital you have to commit to that…

LDI – as easy as buying a house?

In doing training sessions on LDI, trustees can often (quite rightly) get concerned with the complexity and the mechanics. I think this is often because LDI is looked at as a standalone product. Which it is not. As we have talked about before it is important to start from basics and understand first what you…

Gambling, Insurance and Derivatives

Tim Harford wrote an interesting piece for BBC this week on the line between gambling and insurance. He also mentioned derivatives which piqued our interest. In the article, Harford recounts that the Lloyds insurance market originated as a group of people taking a bet on topical events and evolved into a bigger group of people…