While equities are often considered the best weapon to wield in ESG-related engagement, pension schemes also have huge power through their bond allocations, says Mitch Reznick
Pension funds could face a dilemma over their fiduciary duties as falls in gilt yields mean they may have to buy securities that are guaranteed to lose money, according to Cambridge Associates.
Pension schemes that have not hedged their liabilities could face funding issues as long-dated bond yields have plummeted, industry experts have warned.
The amount of hedging against interest rate risk rose to £31.7bn in the fourth quarter of last year, according to BMO Global Asset Management.
Stephen Jones says the broader 'outside' world might be fraught with challenges, but companies are prospering and voicing few concerns. However, caution is warranted.