Fri, Dec 2, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: The changing role of hedge funds in pension plan portfolios

Thursday, May 02, 2013

amb
Shahid Ikram
This article was authored by Shahid Ikram, CIO at Aviva Investors, a global asset manager that is part of Aviva, one of the world’s largest insurance companies, and appeared first in Swiss daily newspaper Le Temps on Monday.

Mounting pension deficits present a dilemma for trustees. New cash from plan sponsors is in short supply and projected returns from mainstream assets are unlikely to close the funding gap. We believe the answer lies not in taking more risk, but in working smarter by applying hedge funds as part of a coherent risk-budgeting framework across the entire portfolio.

***

Mounting deficits are forcing pension plans to rethink their approaches to investment and portfolio construction. The root of the problem lies in schemes’ historic over-reliance on equities, which have produced disappointing returns. These, combined with falling bond yields and rising life expectancy have exacerbated the divergence between plans’ assets and liabilities. As a result, trustees often look to asset managers for solutions that will make pension assets "work harder", often by assuming higher levels of risk. However, a pension fund that is already in deficit is likely to have a tight risk budget and can ill-afford risking precious (and potentially irreplaceable capital) in higher-risk strategies. We believe that the answer to this dilemma lies in working smarter, not harder, by developing more intelligent......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. People - Nectar Financial hires senior investment team, Texas A&M replaces retiring foundation investment chief, Ex-Cadwalader partner Woolery makes another sudden exit, How to become a Python coder at a top hedge fund, by the co-CTO of Man AHL[more]

    Nectar Financial hires senior investment team Nectar Financial AG, a Swiss financial technology company for wealth and asset management, has announced that it has hired two key senior leaders to spearhead its digital asset management efforts. The company also announced that it has entere

  2. Activist News - Cognizant has introductory discussion with activist investor Elliott; to review letter, Starboard Value makes huge investment in Hewlett Packard, Hedge fund calls for removal of First NBC Bank CEO[more]

    Cognizant has introductory discussion with activist investor Elliott; to review letter From Indiatimes.com: Cognizant said it had an introductory discussion with Elliott Management after receiving the activist hedge fund's letter asking for a board shakeup, a buyback, a dividend and chan

  3. Opalesque Exclusive: Ireland relaxes treatment of direct lending funds[more]

    Bailey McCann, Opalesque New York: The Irish Central Bank has relaxed its treatment of direct lending funds, according to a recently released

  4. M&A - AllianzGI to acquire Sound Harbor Partners, SS&C completes acquisition of Wells Fargo's Global Fund Services business[more]

    AllianzGI to acquire Sound Harbor Partners Allianz Global Investors (AllianzGI), an active investment manager, announced that Sound Harbor Partners, a US private credit manager led by Michael Zupon and Dean Criares, have agreed to join its fast-growing Private Debt Platform. Under the te

  5. Hedge funds gain on Trump market rally, positive U.S. data[more]

    Komfie Manalo, Opalesque Asia: Hedge funds enjoyed meaningful returns in the week ending November 22, with the Lyxor Hedge Fund Index moving up 0.7% over the period (-1.6% YTD). From a broad perspective, all strategies ended the week on a positive note except for CTAs that ended flat. Event d