Investment Strategy
Our goal is simple: to help clients reach full funding with the minimum level of risk within the right timeline.
Tangible Goals and Objectives
Setting clear, tangible goals and objectives in a structured form is an extremely important, but often neglected, stage of strategic asset allocation. When we take on a new client, we work with the trustees and other stakeholders to gain a full understanding of their objectives and constraints and, if required, we suggest adaptations to the governance to facilitate decision-making.
Factors we address
Regular performance and risk reports summarising a scheme’s funding position.
Asset and liability performance analysis.
A thorough profile of the scheme’s overall risk, and more specifically, where those risks originate from.
Clear-cut analysis detailing the scheme’s sensitivities to interest rate, inflation, credit and longevity changes.
Historical and forward-looking analysis of markets, investments and portfolios.
Flight Plan
Using all this information, we carefully construct a Flight Plan to full-funding, against which all subsequent analysis and strategies can be benchmarked. The accompanying detailed ALM analysis allows us to design an appropriate investment strategy for each client.
The Flight Plan projects the expected funding level of the scheme and outlines the path to its objectives under a given investment strategy. The steepness of the funding trajectory represents the required return on the scheme’s assets. The steeper the trajectory, the harder the assets have to work to reach the funding target.
Having agreed the Flight Plan and the broad investment strategy based on ALM analysis, we then work together with all stakeholders to implement and execute strategic decisions.
Client Focus
Build Consensus
We help pension schemes build consensus among stakeholders and advisors about key objectives.
Help Stakeholders
We help pension schemes find common ground among stakeholders upon which you can build a robust risk management framework and the best possible investment strategy.
Devise Solutions
We work with stakeholders within a pension scheme to devise solutions to its issues and challenges so as to encourage ongoing efficiency and speed of decision-making.
Case Study
One of our clients was awarded Best De-Risking Strategy 2011. Redington worked with the client to calculate, monitor and act upon triggers to take advantage of funding level improvements.
The de-risking strategy involved reducing growth assets as the scheme outperformed its Flight Plan and resulted in higher funding levels than the original strategy, with a reduced level of risk.
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At Centrica, we have long been supporters of pension funds looking for alternative sources of long-dated inflation-linked assets. Through their thought leadership, proactivity and market knowledge, Redington demonstrated that they have accumulated a significant amount of intellectual capital in this area.
We were keen to access that knowledge and engaged Redington to advise us on how we should best invest in what is still a new and evolving market. Redington helped us survey the market opportunities, put forward recommendations to the investment committee and select appropriate managers.
Through their work, Redington demonstrated not only technical understanding of the assets and often difficult legislative frameworks, but also an impressive network of strong relationships with an array of asset providers and managers.
Chetan Ghosh, Investment Director, Centrica plc