United Kingdom

Evolving your LDI portfolio – don’t just wing it

Aviation has (surprisingly?) been around for more than 2,500 years.

Kite flying in China is thought to be earliest example of man-made flight, which slowly spread around the world. Many years later, experimentation with gliders led to propeller planes and subsequently the modern aeroplane we all became familiar with in the 20th century. Finally, the progression of science and technology and the advent of digital electronics led us to pilotless drones which are used across the world now for leisure, commerce and somewhat controversially, military use.

LDI has not quite been around two and a half millennia, perhaps 20 years at most, but it has certainly evolved over that timeframe. Although even for the most avid LDI enthusiast, probably not as with much interest as objects in the sky…

Nonetheless, what was once only available to large and sophisticated pension funds (kite flying in the far east?) it is now readily available to all (low budget airlines everywhere?), and UK LDI mandates now top one trillion pounds.

The suite of LDI implementation options, our aviation vehicle opportunity set, has significantly expanded and each vehicle has become more and more accessible to different types of pension funds.

Our key message: you might have implemented LDI five years ago under a particular implementation route. But the industry has moved on, and your circumstances might have changed as well. Why keep bumping around in a propeller plane when a commercial jet might do a lot more for you?

And crucially, not necessarily with an increase in fees. Even the most sophisticated drones cost less than a jet, but can arguably do more? The same can be now often be said of segregated LDI solutions versus pooled funds. Increased accuracy, control and flexibility – all potentially at a lower cost.

How long has your existing LDI mandate been in place? When was the last time you reviewed your existing solution? Of course where you are might be just fine. But if you’re interested in assessing whether your current solution is still fit for purpose – and not just winging it – let us know.

LDI Infographic

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