Approfondimenti

As delegates gather at COP27, they confront the same long-term challenge posed by climate change as they did last year. But the context has changed dramatically: in light of the war in Ukraine, governments need to balance net-zero goals with a new imperative for energy security.

Rising interest rates have lowered future liabilities while decreasing LDI portfolio collateral levels. Here’s how schemes can seek to balance this scenario.

It was a turbulent first half of the year for markets. Has it merely been a challenging period? Or are we seeing a full-scale change of market regime?

Even though 2022 has begun with an abrupt change in the macro narrative, stoked by the Fed, we hold the line on our bullish outlook for risk assets.

In our 2022 Solutions Outlook, members of the team share their insights on what we believe to be some of the key themes for the year ahead. From CDI and credit markets to inflation, green gilts and equity protection strategies, we discuss some of the most important topics for DB pension schemes this year.

Q4 2021 - An introduction to Active Strategies

In fixed income markets, it’s usually when things begin to ‘feel’ better that you run into maximum optimism. But wouldn’t it be ironic if the long-awaited reopening of economies and societies turned out to be a difficult period for markets?

With record amounts of stimulus still gushing through global markets, and the economic cycle at a relatively early stage, we remain positive on risk assets.

Greater political certainty in the US, combined with positive news on both the efficacy and deployment of COVID-19 vaccines, have given investors the green light to add risk.

A once-fringe economic theory has been embraced by liberal politicians at the same time as traditional budget hawks have been in retreat. Its rise has potentially radical implications for inflation and investors.

As we look ahead to the next three months, and consider how to invest on behalf of our clients, we are confronted by seemingly conficting signals from depressed bond yields and exuberant equities.

Nervy investors are eyeing top-heavy market-cap indices with suspicion. But how can they use factors to navigate the trade-off between diversification and concentration risk?

Running RPI-linked assets versus CPI-linked liabilities can pose material risks. But as pension schemes become better hedged – and market pricing becomes more appealing – they may seek to explore CPI-linked assets in greater detail.

Managing transfers out of DB pension schemes.

Cashflow matching strategies are customised investment solutions, designed to enable clients such as pension schemes or insurance companies to meet their liabilities. We believe that emerging market fixed income has an important role to play in designing cashflow matching strategies.

The global risk asset rally continued in early 2017, with emerging market investments the star performers.

There are so many elements to consider when building factor-based solutions it can be overwhelming. We’ve highlighted two case studies of investors tackling these challenges.

The falls over the past two years in high yield and emerging market debt (‘alternative credit’) credit spreads,1 along with indications of late-cycle behaviour in the US, has led some investors to be nervous about allocating to these areas. But should pension schemes reconsider?

In our last quarterly outlook, we flagged our cautious posture on risk assets, taken due to a number of smouldering risks on the horizon. One risk we did not highlight, however, was that a pandemic would break out, causing untold human suffering and economic damage.

Cleaning up the world’s plastic waste will be a monumental effort – one which will have major implications for petrochemical companies and the long-term demand for oil.

Investors have been buffeted by a large number of negative headlines in 2018. We remain of the view that tightening global liquidity conditions are likely to exacerbate market volatility.

Can cyclical tailwinds paper over the structural cracks? And what’s the outlook for global trade, China and equity investors?

Many investors combine concerns over overcrowding in factors with capacity fears. We want to help separate these terms and provide some clarity over the current state of factors.

Is artificial intelligence overhyped, or are we at the vanguard of a new wave of corporate productivity improvements ushered in by next-generation technology?

The consequences of monetary tightening will define the 2018 investment landscape.

A lack of policy space means that central banks may have to turn to more unconventional responses when the next recession occurs.

A renewable revolution is taking place in the way we produce and consume energy and it presents an enormous opportunity for investors.

Peak oil demand is a contentious topic. It is crucial for climate change, yet there are possible negative downsides such as volatile oil equity prices and corporate bond defaults.

The enthusiasm and excitement of a new technology has on many occasions captured the imagination of the supposedly hard-nosed investment community, and encouraged them to overstate its profit potential.

The world is changing and how it looks in five years’ time will be very different to today. A long-term perspective is the key to success.

Investors currently buying UK government bonds are doing so in the knowledge that they are accepting a yield which is lower than the rate of inflation, i.e. the real yield.

In a surprising result, the general election has ended in a hung parliament. At the time of writing, the Conservative party has won approximately 318 seats.

Global credit markets have shown remarkable resilience over the past year.

The logistics industry is seeing increased investment, driven by technology trends including automation and smart manufacturing.

The DC pensions industry has moved forward since auto-enrolment was introduced, with many more saving into a pension. This is great news, but challenges remain. How do we help individuals see the value in saving more for a future that seems a long way off?