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The Weekly Wrap: June 6 edition

By Daniel Scanlon | June 6, 2014

A round-up of pensions and investment stories published across the FT Group – from the ECB's historic move into negative-rate territory, to the LPFA dumping a hedge fund over a lack of transparency.

Dutch collective pensions strain to win UK support

The week in numbers 

The ECB's deposit rate has been cut to -0.1%

LPFA has redeemed its £61m investment in Brevan Howard

More than £9bn of pension derisking transfers were completed in Q1 2014 

FT: Plans to offer British workers access to collective defined contribution schemes are already showing signs of faltering. Despite claims that the schemes could increase retirement income by 30 per cent, employers are reluctant to offer them due to issues such as complexity and possible future rule changes.

ECB unveils radical moves to fight deflation and lift economy

FT: The European Central Bank has responded to the threat of deflation by making historic moves including reducing one of its benchmark lending rates to below zero. The bank cut its deposit rate from zero to minus 0.1 per cent, and reduced its main refinancing rate to 0.15 per cent from 0.25 per cent. The package also included €400bn (£324.6bn) in cheap loans for lenders.

London Pensions Fund Authority redeems investment in Brevan Howard

FT: The LPFA has redeemed its entire investment with hedge fund Brevan Howard, after the investment manager refused to provide a detailed breakdown of its trading positions. The scheme confirmed it had withdrawn its £61m invested with the hedge fund. Brevan Howard, the world's third-largest hedge fund, declined to comment.

Companies and insurers set to shift £20bn of pension liabilities

FT: More than £9bn of pension derisking transfers were completed in the first quarter of 2014, bolstering expectations of a record year for UK companies and insurers, with deals forecast to reach around £20bn. This will surpass the £16.8bn of buy-ins and buyouts in 2013 – the highest since 2008.

High-yield bond bubble feared

FTfm: Prices in the high-yield bond market are close to record highs, stoking fears of a potential bubble. The market has seen a rash of new investors, hungry for yield in a low-interest rate climate. High-yield exchange traded funds have experienced an 18 per cent rise in trading volumes over the past year, despite turnover in the underlying market falling.

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