Room151 brought together six Local Government Pension Scheme (LGPS) professionals and four asset managers, including Huw Davies, investment manager, fixed income at Jupiter Asset Management and Andy Chaytor, desk strategist, global markets at Nomura, to discuss whether bonds are making a comeback.
Download the Fixed income: inflation, interest rates and the investment landscape roundtable here.
In September last year, former prime minister Liz Truss’ mini-budget sent the UK gilt market into turmoil. This exposed many closed defined benefit schemes, with a high degree of leverage within their liability-driven investment (LDI) strategies, to liquidity risks and provoked the Bank of England to intervene.
Ultimately, the whole crisis left some in the sector wary of further investment into the UK bond market.
However, since the turmoil, yields are much higher on UK gilts as currently the yield on a 10-year gilt is around the 4.1% mark. This increase in yields also means that the LGPS’s funding position has increased throughout the year, with many funds coming up to being fully funded and looking to de-risk.
So, with all this in mind, are UK government bonds becoming a more attractive investment for the LGPS?
The roundtable discussion on this topic was held at the London Stock Exchange as part of Room151’s 4th LGPS Investment Forum earlier this month.
Participants
- Abdul Bashir, senior investment manager, Greater Manchester Pension Fund
- Iain Campbell, investment consultant, Hymans Robertson
- Andy Chaytor, desk strategist, global markets, Nomura
- Laura Colliss, pensions investment manager, North East Scotland Pension Fund
- Huw Davies, investment manager, fixed income, Jupiter Asset Management
- Jason Fletcher, advisor, independent
- Simon Freedman, managing director, head of UK sales, global markets, Nomura
- Sean Johns, pensions investment manager, Cornwall Pension Fund
- Rachel Perini, head of UK institutional, Jupiter Asset Management
- Peter Wallach, director of pensions, Merseyside Pension Fund
- Aysha Gilmore, senior reporter, Room151
You can read full coverage of the session here.
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