articles

  • Thu, 29 May 2014 10:27:03 GMT

    Waiting for Godot begins with our protagonists Vladimir and Estragon bickering by a tree. Soon Estragon stands up and peruses the barren landscape:   Estragon: Charming spot. Inspiring prospects. Let’s go. Vladimir: We can’t. Estragon: Why not? Vladimir: We’re waiting for Godot.   Just before the end of Act 1 a boy appears. After establishing that the boy works for Mr. Godot, Vladimir finally encourages the boy to deliver his message: “Mr. Godot told me to tell you he won’t come this evening but surely tomorrow.”   Surely tomorro ...

  • Fri, 09 May 2014 13:27:58 GMT

    I was invited to speak at Fund Manager Selection 2014 last week on Manager Monitoring & De-selection. Below is a Prezi that accompanied my talk, the key messages were as follows:   The jury is out on whether anyone can consistently identify the best performing fund manager(s) in each asset class/category/strategy. However, it is crucial that we as consultants must help clients avoid the worst managers. Many of the reasons that cause clients to review their managers (poor performance, departures, etc) are simplistic, one dimensional and often too late. There a ...

  • Fri, 09 May 2014 09:36:23 GMT

    The following speech was delivered at mallowstreet's "Partnership for Change" event on 1st May 2014, and is available on video here.  Let me start with a simple statement :    “If we don’t act now to provide the financial education that people in the UK need – we face one certain outcome – a socio-economic crisis.”   According to Financial Education charity pfeg; “Two-thirds of people in the UK feel too confused to make the right choices about their money.”  The reason behind this is clear, a lack of app ...

  • Wed, 07 May 2014 14:20:27 GMT

    The Budget announcement that savers will no longer be required in future to buy an annuity when they retire is a hugely important reform which must now become the catalyst for some radical rethinking of our pension system. The demise of final salary schemes and the growth of defined contribution (DC) pensions have created a powerful sense of insecurity which is proving to be corrosive in establishing an effective savings culture.  The reason for this collapse in confidence is simple - people saving in DC schemes no longer have very much faith in what kind of pension they might enjoy ...

  • Mon, 07 Apr 2014 12:07:21 GMT

    The latest draft of the revised IORP Directive was published on 27th March by the European Commission. The revised directive is aimed to achieve better governance of occupational pension schemes (Defined Benefit, Defined Contributions…Defined Ambition in the future), more informed communication with scheme members, remove obstacles for cross-border provision of services across EU and encourage schemes to invest in long term assets which support the growth of the real economy.   Here is the link to the revised directive: http://ec.europa.eu/internal_market/pensions/directive/ ...

  • Thu, 03 Apr 2014 10:59:40 GMT

    In my previous blog, I outlined when it would be worth using a long-term risk model, and identified three fundamental reasons why you might need one. Taking a step back, how this applies in any situation will vary depending on what you’re trying to do. To frame the discussion, I shall use the example of a DB pension scheme. For a DB pension scheme, the risk is being unable to pay the pensioners, and the point of a model is to make better investment decisions. There is a simple framework for doing this: using a deterministic model, solve for the returns required to reach investment ...

  • Mon, 31 Mar 2014 13:08:27 GMT

    An alternative way to manage interest rate risk launches today. NYSE Liffe’s ultra-long gilt future will offer a new way to gain synthetic exposure to gilts, the biggest challenge is whether it gains sufficient market interest to offer an ultra-long-term alternative. For pension schemes looking to hedge their long-term liabilities, the new ultra-long gilt future could well be of interest. It brings a number of potential benefits, however, its success is not guaranteed.   The new future will target a 30 year maturity, with a 4% implied coupon, £100k notional size a ...

  • Mon, 24 Mar 2014 15:56:48 GMT

    Last week on Wednesday, the Chancellor announced the 2014 Budget. Although, according to the FT, in the run-up to the publication there were hints that George Osborne might “pull a rabbit from the hat”, not many had expected the kind of pension reform bombshell the Chancellor dropped.What Happened? In essence, the new law makes it possible for the Defined Contribution (“DC”) pension scheme members to withdraw their entire pension pot all at once upon retirement, without incurring a highly punitive tax, as it was the case so far. Before the change, the system was r ...

  • Thu, 20 Mar 2014 17:46:25 GMT

    Last week was Learn Money Week - a global money awareness week celebration, uniting organisations with a shared goal - to financially educate the young. On Monday the 10th of March, at the launch of UK's Learn Money Week near MyBnk’s offices in Shoreditch, a variety of people from different backgrounds showed their support for financial education. Charities, fund managers, schools, pension schemes and social enterprises all were united in agreement that there is a need for educating young people about money.   Momentum is growing, with financial literacy officially enter ...

  • Wed, 19 Mar 2014 16:28:39 GMT

    In a quest to reduce exposure to reinvestment risk are pension funds jumping out of the frying pan and into the fire by taking on more illiquidity risk, or is there a balance to be struck?   For many pension funds 2013 was a relatively good year. Developed market equities rallied (the S&P500 was up nearly 30%), credit spreads tightened and even real yields showed some improvements, albeit marginally so.   Those funds positioned to benefit from this would have seen their funding ratio rise, and for some, rise faster than anticipated by their flight plan. Those fortun ...