UK pension funds focus on inflation, rate protection as LDI market grows

first_imgQuarterly figures, gathered from derivatives trading desks, showed interest rate liability hedging grew an additional 9%, which the firm put down to an increase in funding levels boosting risk-reduction.The manager said pension funds’ previous interest in inflation hedging had led them to add interest rate mechanisms to create real rate hedges.Inflation hedging decreased for the second quarter running. However, even interest rate hedging remains below a record of £23.4bn set in the third quarter of 2013.KPMG’s research, brought together using figures from LDI managers, showed growth in the use of swaptions within LDI strategies, albeit to a limited audience, generally larger schemes.Allocations grew by £9.8bn over 2013, but the number of pension funds utilising swaptions was still only 25.Other synthetic return generating approaches were not as popular, with some strategies seeing a decline in allocations.The use of equity options within LDI strategies fell, with small growth in the use of futures and total return swaps in equities. However, the use of these strategies remained limited.As with swaptions, the concept of LDI also remained fairly limited and under-utilised by schemes smaller than £50m.Some 21% of the 825 mandates seen to date have been used by schemes of this size.KPMG said there was not significant appetite for LDI strategies, despite some allocations from smaller pension schemes, .“There appears to be plenty of opportunity for small schemes to access well structured and good value pooled vehicles,” the KPMG report said.“It seems the demand from small schemes is much less than from larger schemes.”With regard to implementation, schemes larger than £500m implemented segregated and bespoke mandates from managers, while those between £50m and £500m have appetite for this and pooled mandates.KPMG’s report also predicted further growth in the LDI market through 2014, as funding levels continue to improve for UK schemes.Barry Jones, head of LDI at KPMG, added: “With many pension schemes looking to lock in the profits following another bumper year for equities, we’d expect another wave of de-risking in 2014, and the LDI market is likely to be the primary recipient.” The UK liability-driven investment (LDI) market continued to grow in 2013 as the value of allocated assets broke £500bn (€628bn), with a 21% increase in the number of mandates, research shows.Annual research from consultancy KPMG showed the level of assets from pension funds reached £517bn by the end of last year, an addition of £74bn.During 2013, in an alteration from the year previous, growth in liability hedging was shared equally between inflation risk and interest rate risk, compared with 2012, where inflation caused more concern to schemes.This trend has continued into 2014, according to additional research from asset manager F&C.last_img read more

Vero Beach woman charged with murder after mother found dead

first_imgThe Indian River County Sheriff’s Office said 81-year-old Carmelina Kholer, and her adopted daughter, 38-year-old Crystal Kholer were last seen headed to a nail salon on Monday around 11 a.m.Crystal later returned home in her adopted mother’s van, alone.Carmelina was then reported missing. Authorities said Carmelina’s phone was found in a location that she had no reason to be.On Tuesday morning, detectives received a tip on where Carmelina’s body was located.Sheriff Deryl Loar said Crystal Kohler was in possession of cocaine, and was arrested on charges of grand theft auto and driving with a suspended license. She was later charged with first degree murder. She’s being held in the Indian River County jail without bond.Officials will continue to investigate what led to the murder of Carmelina.If you have any information about Carmelina’s death, you’re asked to contact Detective Rebecca Hurley at 772-978-6240. Police have arrested the adopted daughter of a missing woman who was found dead on Tuesday.Daughter arrested after mom goes missing in Vero Beachlast_img read more