Asset Allocation
The flight to gilts, especially index linked gilts, and the resultant real interest rate decline is well documented. Pressure on trustees to minimise risk at the expense of long term return adds to company cost and a more balanced asset strategy is required.
Over recent years the larger scheme investment strategy has developed from the traditional equity / gilt split through duration matching bond strategies, to installing a swap overlay to remove duration risk to leveraged swap structures which reduces risk but leaves more of the assets to invest in the search for greater returns.
These more sophisticated approaches can increasingly be adopted in a cost effective manner for smaller schemes to the benefit of all.
PCS advises companies on more sophisticated, derivative dependent asset and liability
management products and vitally, which approach to use.
