Liability Driven InvestmentsWe manage an investor’s assets relative to their liabilities (or investment goals) so that their assets either perform in line with, or outperform the liabilities. We minimise market risk by hedging against movements in interest rates and inflation risk and deliver alpha by investing across the credit continuum, in both listed and unlisted credit assets. The success of our approach is evidenced in a history of stable and consistent outperformance over long time periods and within tight tracking errors.
- Hedged out (those “unrewarded” risks that do not offer sustainable risk premia over the long term), or
- Managed through fundamental research and analysis (“rewarded” risks that offer sustainable risk premia over the long term).
We regard interest rate risk and inflation risk as unrewarded risks and believe that they cannot be sustainable sources of alpha over the long term. It is therefore our philosophy to hedge out these risks. This is achieved via a quantitative risk-managed approach to hedging such that changes in assets match changes in liabilities in the presence of yield curve changes. This provides a defensive return profile relative to our clients’ liabilities in extreme market scenarios.
Integrating ESG Factors
Given the long-term nature of certain liabilities, ESG factors have a material impact on the sustainability of an investment. When analysing a potential counterparty, we assess whether our ESG concerns are important enough to impact its credit quality and prevent us from investing from a reputational perspective. Learn more