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UK asset managers boost LDI teams for de-risking schemes

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  • UK asset managers boost LDI teams for de-risking schemes

UK - A number of UK asset managers have recently made moves to strengthen their liability-driven investment (LDI) teams at a time when consultants encourage pension funds to consider new de-risking strategies.

The moves made by AXA Investment Managers (AXA IM) and Ignis Asset Management suggest the switch towards LDI strategies undertaken by pension schemes in recent years continues apace.

The two asset managers both recently bolstered their teams, with AXA IM appointing two new members to its multi-asset client solutions team from Legal & General Investment Management (LGIM) and Ignis hiring an LDI specialist from BlackRock, one of the largest providers of LDI solutions in the UK.

Shalin Bhagwan and Lucy Barron joined AXA IM as UK head of LDI and senior pension solutions managers, respectively, while Jo Howley joined Ignis Asset Management from BlackRock as LDI product and fixed income specialist.

Laura Brown, head of solutions at Ignis, said: "Our focus has been to achieve consultant ratings in the hope of working with more pension schemes in the future.

"Now that this process is significantly advanced we have expanded our team to ensure we maintain the highest possible levels of transparency and client service, which is imperative in the challenging environment in which we operate. It is important to work as closely as possible with trustees, scheme managers and their consultants to fully understand their evolving needs and to provide the most appropriate tailored solutions."

Ignis currently manages £30bn (€37bn) of assets against liabilities, primarily on behalf of its parent company, Phoenix Group, and associated life insurance clients.

AXA's team manages €114bn in LDI solutions for institutional investors across the world from hubs in Paris, London, Zurich, Frankfort, Tokyo and Hong Kong.

Recent years have seen the expansion of LDI solutions, with a broad range of instruments being developed to better tailor liability solutions to pension schemes.

The latest example was seen with the appointment of LGIM by the Superannuation Arrangements of the University of London (SAUL) pension scheme.

The UK pension fund appointed LGIM as its LDI manager earlier this month, extending its 10-year relationship with the asset manager.

Shalin Bhagwan, the new head of LDI at AXA IM, said many pension schemes had been biding their time before adopting de-risking strategies.

According to him, the shift towards LDI strategies was mainly due to the current low-yield environment and quantitative easing (QE) policies.

"The continuation of a low-yield environment and negative real yield was the reason for such a slow pace," Bhagwan added.

"Many pension schemes have been waiting for a day where there would be higher real yield. But the current low-yield environment has forced many pension schemes to reassess their assumption, as the situation in the market has [shown that trustees] could wait for quite a long time to see yields rise again.

"At the same time, we are also seeing unprecedented central bank action with QE measures, which perpetuates a policy of low or even negative real yield."

AXA IM is now seeking to expend its LDI team even further, with another hire likely to come before the end of this year, Bhagwan said.

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