AXA Investment Managers (AXA IM) has added to its suite of liability driven investment (LDI) solutions with the launch of a pooled fund range designed to meet the specific liability hedging needs of UK pension funds.
The range is intended to provide an effective and efficient liability hedging solution within simple and flexible pooled funds. Three different suites (nominal, real and inflation only) each offer five different maturity buckets to allow UK pension funds to achieve a good liability hedging solution by type of sensitivity and by maturity.
Schemes can hedge their interest rate and inflation sensitivity together or separately and liabilities can be hedged at 10 year intervals from 10 years to 50 years in the future. Within these funds AXA IM seeks to add value and reduce risk by taking advantage of relative value differences between a range of similar hedging instruments on an on-going basis. Clear and transparent reporting ensures clients can easily monitor key risk measures. The solutions are simple to implement with the necessary legal documents already negotiated and collateral managed within the fund.
Jonathan Crowther, head of UK LDI at AXA IM, says: “We believe our LDI pooled fund range allows even smaller UK pension funds an efficient and cost-effective way to achieve a good liability hedging solution. We provide ‘smart’ implementation – using our discretion and market views to manage investments based on current market conditions with the aim of maximising return and minimising cost and risk using the most efficient hedging instruments, broad counterparty diversification and daily collateral management.”
AXA IM offers a suite of LDI solutions that can be tailored to a client’s governance budget and takes into account the dynamic nature of objectives, funding levels, actual projected liability cashflows and market conditions. Solutions include multi-client pooled funds, bespoke pooled funds and segregated mandates.
Laurent Seyer, global head of multi-asset client solutions at AXA IM, adds: “Any LDI strategy should first and foremost be about managing risk. As part of the AXA Group we have considerable experience in constructing and implementing LDI strategies. Our locally based UK LDI team leverages our global infrastructure with continuous oversight by independent risk management teams. We work in partnership with our clients and their advisers to design and implement LDI solutions to meet their unique objectives and liabilities in a risk-controlled manner.”