UK - Barclays Global Investors (BGI) has unveiled a suite of twenty pooled liability driven investment (LDI) funds, with over £1bn assets.
The new product suite, called BGI Liability Solutions Funds, can be used by pension funds to address interest rate and inflation risks so that there is a closer link between their assets and their liabilities.
The funds will also help pension funds to create bespoke portfolio solutions, which provide cashflows in line with their liabilities as they fall due.
BGI said that the Liability Solutions Funds are the first LDI solutions to include retail price inflation funds as part of the pooled fund selection:
* Fixed – seven funds extending out approximately 50 years, each aiming to provide cash flows which reflect fixed payments between investment and fund expiry; *Retail Price Inflation (RPI ) – seven funds extending out approximately 30 years, each aiming to provide cash flows which reflect retail price inflation between investment and fund expiry; *Limited Price Indexation (LPI – price inflation limited by a 5% cap and 0% floor) – six funds extending out approximately 30 years, each fund aiming to provide cash flows which reflect limited price inflation (0%, 5%) between investment and fund expiry.
Tarik Ben-Saud, head of LDI Solutions at BGI, said: “A quantitative approach to investing is essential to managing LDI solutions. It is no accident that the very same approach is second nature to BGI and fundamental to its investment philosophy.”
BGI has offered LDI solutions to pension funds on a segregated basis for over two years, and now manages a total of £15bn in LDI funds.
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