UK - Citigroup Asset Management (CAM) has launched a new sterling core plus fund which invests in global government bonds, currencies and non-traditional fixed income assets including investment grade bonds, US high yield, emerging markets debt and mortgage-backed securities.
Citigroup said the new fund came on the back of a shift in UK asset allocation. In December 1993, the average pension fund allocated 10% to bonds, compared to 24% at the end of 2003. UK fixed income weightings have doubled in the last seven years, ending 2003, the manager added.
Though new to the UK market, the fund builds on the firm’s fixed income strategy used in the US for more than a decade.
Winifred Robbins, fixed income senior investment officer for Europe, Middle East and Africa, said: “To deliver this approach, fund managers need to be global players. Citigroup Inc, which conducts business in more than 100 countries, can leverage its global experience and this sets us apart from our competitors particularly here in the UK.”
The new fund aims to provide returns 3% above the Over 15-year UK gilts fixed income benchmark. Outperformance is targeted through the strategic weighting of non-traditional asset classes. Allocations to these asset classes are made on a tactical basis to reflect macroeconomic considerations over a shorter time horizon, Citigroup said.
Frank Doyle, CAM’s regional sales director for UK and Ireland, said the fund was launched in response to client feedback.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.