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.”
Scottish Widows has completed a bulk annuity deal for the Hitachi UK Limited Pension Scheme.
The lifetime allowance will rise to £1,054,800 from April next year as the Office for National Statistics (ONS) recorded inflation at 2.4% in the year to September.
The national procurement frameworks for the Local Government Pension Scheme (LGPS) has been expanded to include member data services.