Plan sponsors’ needs for long-dated bonds and the role of fixed-income managers may change as average liabilities fall to fewer than 10 years.
Some pension CIOs are adjusting their market scenario analyses to make sure their portfolios are well positioned to capture upside and avoid drawdowns.
The Pensions Regulator and the Financial Conduct Authority aim to prepare LDI investors for future volatility.
The Pensions Regulator wants LDI-driven plans to be ready if yields suddenly jump like they did in September.
The de-risking trend has seen equities cut in half since 2008, to around 30% of assets, and Milliman thinks that’s where it will stay.
LDI strategies allow for passive equity to be replaced by holding ‘cash’ and synthetic equity instruments. But with better funding statuses, are pensions’ derivative positions less necessary?