Market moves: Some pension funds think the Bank of England’s gilt market intervention should go further, while schemes pull capital out of multi-asset credit funds.
Schemes want prolonged BoE intervention
Some pension funds want the BoE to continue its intervention in gilt markets beyond its scheduled October 14 deadline, according to the Pensions and Lifetime Savings Association.
The BoE has stepped up its involvement in the gilts market on two occasions since its initial intervention at the end of September, announcing on October 11 that its bond-buying programme has been widened to include index-linked gilts.
Shortly after the announcement, the PLSA said it believed that most funds had used liability-driven investments “in a prudent manner”.
“Following [October 11’s] and [October 10’s] statements by the BoE, we will further assess with our members whether they believe any additional actions are necessary to achieve orderly markets,” it said.
“However, a key concern of pension funds since the BoE’s intervention has been that the period of purchasing should not be ended too soon,” it continued.
“Many feel it should be extended to the next fiscal event on October 31 and possibly beyond, or if purchasing is ended, that additional measures should be put in place to manage market volatility.”
Funds pull out of multi-asset credit
Pension schemes have taken capital out of multi-asset credit funds in order to meet collateral calls, Bloomberg has reported.
Funds run by asset managers, such as Schroders and Aviva, have tracked “hundreds of millions of pounds in net outflows” since the government announced its “mini” Budget on September 23, Bloomberg said.
With schemes having sold down government and corporate bonds, industry insiders have told the site that diversified return and multi-asset funds are now being sold.
