UK - Axa Investment Managers is planning to launch structured equity and fixed income funds that can be used to match scheme liabilities.
The move comes after Schroder Investment Management, Aegon Asset Management and Standard Life Investments said they were launching structured products which use derivatives and swaps to extend the natural life of schemes’ portfolios and match their liabilities.
But while most fund managers are offering fixed income funds that can match schemes’ liabilities, Axa claims it can use the same techniques to control equity portfolio risk and ensure they meet either a specified minimum return or a predetermined set of cash-flows.
Axa structured products director Vincent De Martel said: “We are taking out to market a range of solutions that are liability-driven for both fixed income and equities.
“We’re in the process of taking out dynamic strategies that are managed to a particular target the client has.”
He added: “Clients could be afraid of interest rate risk, inflation risk or being underfunded in the future.
“We have ways of controlling this and are applying them to a variety of asset classes.”
Schroders also offers equity funds for liability-driven mandates, and executive director Steve Aukett predicted that the combination of “a low return investment environment and FRS17” would boost demand from schemes for these products.
“The range of available investment products and solutions will widen further in the future,” he predicted.
“We will see a significant increase in the number of long-dated mandates with objectives set in relation to liabilities or inflation.
“We expect to see unconstrained equity mandates gaining ground and derivative-based structures used for many funds.”
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.