Physical gilts have generally offered a yield pick-up over equivalent swap-based exposure. Yet this premium has declined over the past two years as pension funds have continued to invest heavily in gilts to match liabilities. Let's consider how much this premium might have to fall for investors to swap bonds for swaps.
2018 will probably be remembered as the year volatility returned to the market. As highlighted in our CIO's investment outlook, there are a number of tail risks on the horizon that could cause this to continue. While there is no panacea for market volatility, these four simple steps can help reduce the impact.
Defined benefit (DB) pensions schemes have recently been buying equity protection (put options) to reduce downside risk. But could writing puts ever make sense?
Buying cars and protecting yourself from equity market falls may not appear to have much in common. But you might choose to do both if you had the option…
For many years there has been much debate around the size of defined benefit scheme deficits and the extent they reflect on the health and sustainability of the schemes. But is there another way of thinking about pension scheme solvency?
Are zombie pension schemes a viable option? And if so, how should their investment strategy be set?
What do inflation-linked pension benefit schemes and Texan cowboys have in common? We look at a source of scheme risk that many trustees may not have considered: limited price indexation risk. This could become increasingly important for trustees as their schemes progress along their de-risking glidepaths.
If your base case is that interest rates will rise faster than is already priced in, how much should you under-hedge? The answer could be less than you think.