sponsored by
Where am I? 
Home Investment
Professional Pensions | 29 Sep 2011 | 11:16
Categories: Investment, Fixed Income
UK pension schemes should look outside the domestic inflation-linked gilt markets to the global bond markets to hedge risks and obtain higher yields, according to PIMCO.
Product manager Berdibek Ahmedov said the the UK index-linked gilt market is too expensive because of the demand from pension funds and limited supply.
"You have around £1.1trn of liabilities linked to some sort of inflation, where it is capped or floored or not, and you only have about £300bn of supply. There is a clear mismatch," he said.
The rush to buy inflation-linked gilts was, in part, prompted by the initial bout of quantitative easing - in which the Bank of England purchased £200bn of assets from March 2009 to January this year.
Inflation also rose by 0.75% to 1.5%. There has been wide speculation that the bank of England will start a fresh round of quantitative easing later in the year, fuelling inflation concerns once again.
Ahmedov added: "Looking ahead we think UK inflation risks are mainly skewed to external factors and this means the global inflation-linked bond approach makes more sense than before."
Categories: Investment, Fixed Income
Professional Pensions jobs for all the industry’s latest vacancies. Visit now to find your perfect job.
Updating your subscription status 
Advertisement
Advertisement
Advertisement
Advertisement
sponsored by
Recent comments