UK - The £1bn (€1.1bn) group pension scheme of UK supermarket retailer Asda, has appointed Cardano's London office for a so-called 'solvency management' mandate.
Cardano today revealed it will take on delegated responsibility for managing the overall relationship between the scheme's assets and liabilities for part of the scheme's assets, while advising on all aspects of the remaining assets.
According to Phil Page, client consultant at Cardano, its model of solvency management fits into the spectrum of fiduciary management, as he further explained: "This is the broadest approach you can go for whilst retaining the assets as property of the trustees; if you go even further along the fiduciary management spectrum you can have things like insurance company buyouts, where the insurance company is doing a similar thing as Cardano, but in an insurance regulatory regime."
Cardano both selects the managers within the defined investment areas, while also choosing the allocation to these areas rather than working with static investment weights.
The pension fund has set Cardano a return target compared to the liabilities, and the solvency manager is to close down the deficit and improve the solvency level in a risk- controlled way, according to Page.
"The assets will seek to outperform the liabilities by 2% per annum, and we set some risk parameters," he added.
The selection of the asset types, the fund managers, and the specific derivatives used to hedge risks is the firm's discretionary responsibility.
Richard Phillips, chairman of the Trustees at Asda said: "We have chosen Cardano because they are focused on the big picture - our funding ratio - not just each investment in isolation."
According to Phillips, the fund wanted to work with a team who would identify market opportunities and be nimble enough to invest in them.
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