Railpen, the in house manager of the £16bn Railways Pension Fund, is set to switch benchmarks to the Lehman Global Aggregate Index in the third quarter, according to its chief executive Peter Murray.
Following discussions with its global bond managers and a review of its fixed income benchmarks, Railpen has decided to switch benchmarks and to focus more on corporate bonds.
According to Murray, Railpen is concerned that sovereign bond benchmarks are set to be weighed down by a heavier weighting in Japanese government bonds.
Currently, Railpen uses the Salomon World Government Bond Index, and as Railpen expects Japanese bonds to soon make up more than 50% of the index, the decision was made to switch indices and invest more in corporate bonds in order to increase diversification and reduce risk.
Railpen's current global bond managers are Fischer Francis Trees & Watts, Credit Suisse Asset Management and Merrill Lynch Investment Managers.
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