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….

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…

LDI Takeaways from the FCA Market Study

It would be difficult to write something at the moment without talking about the recently published FCA Asset Management Market Study. I have tried to pull out three key messages which I believe are of particular significance for LDI managers. Focus on client outcomes The core message from the FCA was that everyone should be…

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…

Being cashflow negative is a symptom, not a cause

There is an increasing weight of discussion around the challenge of schemes being cashflow negative (i.e. pension schemes are net disinvestors as benefits are greater than sponsor contributions). This was specifically raised in the Pension Regulator’s Annual Funding Statement with subsequent research from Hymans Robertson highlighting this as a worry for CFOs. The apparent risk…

Thoughts on Steel pensions

As published in Portfolio Institutional The evolving situation with the steel industry has interested me greatly; not only because I got married in Port Talbot, but also because the pension scheme is at the forefront of discussion. This has been most true in the last day or so where the discussion has been  around reducing…