All Derivatives articles
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NewsSchemes get permanent exemption from derivative clearing rules
Pension schemes will not be required to trade derivatives through central counterparties after the government extended a regulatory exemption indefinitely.
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NewsWhy Railpen brought its trading desk in-house
Amid widespread industry debate on consolidation and the benefits of insourcing and outsourcing, Railpen’s Jack Crawley explains how the £34bn scheme internalised its trading function.
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NewsFCA: Liquidity buffers are a ‘necessary but partial solution’
On the go: The Financial Conduct Authority has urged managers of liability-driven investment funds to learn the lessons of the autumn liquidity crisis, claiming that liquidity buffers represent only part of the solution to future volatility.
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NewsKwarteng out as LDI derivative losses set to hit £149bn
Market moves: Liz Truss sacks Kwasi Kwarteng, with Jeremy Hunt installed as chancellor; JPMorgan estimates market-to-market losses from liability-driven investment derivatives could hit $167bn (£149bn); and schemes rush to prepare as the Bank of England ends its bond-buying programme.
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NewsStrikes ‘likely’ over TfL pension changes as funding deal reached
Changes to the TfL Pension Fund will be required as part of a financial support package agreed between the government, Transport for London and the mayor of London, with a plan to be presented in September. But unions have rejected the deal, and warned that more strikes are “likely”.
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NewsNest hires efficient portfolio manager
On the go: Master trust Nest has appointed a manager to help make its portfolio management more efficient through the use of derivative contracts.
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NewsDB schemes can be severely impacted by Libor closure
The end of the London interbank offered rate at the end of this year is expected to have huge consequences for defined benefit schemes, which historically have been using it for different asset class investments and even for managers’ benchmarks.
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OpinionHow should pension funds apply ESG to derivatives?
Despite the prominence of derivatives across UK pension scheme portfolios, the assessment of sustainability factors in derivatives remains relatively nascent, writes Cardano UK’s Kerrin Rosenberg.
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OpinionIs there a future for equities in DB?
Data Crunch: Corporate defined benefit schemes have been shifting allocations away from equities as a means of reducing funding volatility and focusing on assets that can deliver contractual cash flows.
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News
Looming Brexit sees slowdown in LDI derisking trend
On the go: Interest rate and inflation hedging activity by UK pension schemes saw a dramatic slump in the second quarter of 2019, although experts said this was more likely due to Brexit "frontloading" than a sustained slowdown.
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News
BoE highlights systemic risk of funds’ use of leveraged loans
On the go: Pension fund liability-driven investing techniques are among the systemic risks to the UK’s financial system highlighted by the Bank of England in a new report.
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OpinionWhy schemes cannot rely on credit strategies alone for CDI
Cash flow-driven investing is flavour of the month with managers and consultants, but River and Mercantile’s Mark Davies says a credit-reliant implementation of this strategy does not mitigate as much risk as trustees might assume.
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OpinionIndustry must help small schemes keep up with standards push
Small schemes will always lack the time and resource to match the sophistication of their larger peers unless consultants and providers help them, writes River and Mercantile Derivatives’ Mark Davies.
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OpinionWhy equity protection should never be too expensive for schemes
From the blog: Equity protection is back in vogue, with falls in markets at the start of the year putting downside protection strategies front of mind.
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Features
Cumbria implements equity protection strategy
The Cumbria County Council Pension Fund has joined the ranks of local authorities hedging their equity downside with an equity protection strategy. Nearly £1.1bn of the fund’s equities will be covered by the arrangement.
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Features
Islington weighs up equity protection strategies
The London Borough of Islington Pension Fund is assessing three equity protection strategies as part of its ongoing investment strategy update.
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FeaturesTaylor Wimpey builds synthetic equities to tackle volatility
The pension scheme of housebuilder Taylor Wimpey has undertaken a widespread derisking programme, strengthening existing hedges while converting physical equity investments into a synthetic, volatility-dampening exposure.
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NewsCapital protection key as ABF introduces equities overlay
The Associated British Foods’ UK defined benefit pension scheme has implemented an equities derivative overlay strategy to give added risk protection to its substantial portfolio of growth assets, maintaining a strong allocation to equities.
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News
Hedging at a high as schemes lose hope for fast rate rise
Institutional investors in the UK increased inflation hedging by 11 per cent over Q3, according to a survey – a sign that schemes and sponsors have reached the limits of their tolerance for widening deficits.
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Features
GMP top priority this year but trustees could be missing the bigger picture
Respondents to consultancy Capita’s ‘Pension scheme insight report’ cited guaranteed minimum pension reconciliation, member communications and derisking as their main concerns for 2016, but experts say there are more acute challenges that schemes fail to address.