TPT Investment Management (TPTIM) has launched a new liability-driven investment (LDI) solution for UK pension schemes in conjunction with Insight Investment.
The LDI solution will be available to defined benefit (DB) schemes through TPTIM’s fiduciary management service. It is designed to enable schemes to implement robust long-term funding strategies focused on their endgame objectives.
TPTIM said the solution offers an integrated approach to help pension schemes manage liability risk, return requirements and liquidity needs. It added the solution is flexible to the specific needs of individual schemes while also offering better value due to the benefits of scale from consolidation.
It is built around the liability hedging contribution from non-LDI assets such as corporate bonds and secure income investments. The LDI offering is supported by the liquid asset portfolio, and this is fully integrated into the collateral management framework.
TPTIM added that as the fiduciary manager with control over the whole portfolio, it can “efficiently rebalance between liquid assets and LDI when required”. It will use a total portfolio approach to LDI that achieves a close curve match, utilising funds designed around client liability profiles, it said.
The firm explained that this will maximise capital efficiency to meet required returns through a collateral framework designed around a holistic view of portfolio liquidity. It will also provide TPTIM with the flexibility to set recapitalisation and re-leverage points of the funds, so capital isn’t tied up in LDI funds unnecessarily.
Peter Smith, head of investment at TPTIM, said: “We’re excited to launch our new best-in-class LDI solution with Insight Investment, which brought an innovative and collaborative spirit to the development of this new solution for DB schemes.
“As a benefit of our scale and consolidation, we believe it provides an excellent value proposition that would not necessarily be available to smaller, stand-alone schemes.”
Smith added that the LDI solution is “bespoke” and can be tailored to the needs and risk profiles of individual schemes to manage their specific liability characteristics, return requirements and liquidity needs, while risk management is enhanced through industry-leading data and reporting.
“The experience of our investment team and alignment of interests with our ownership will allow us to continue to pass the benefits of our scale onto other trustees and schemes,” he noted.
Serkan Bektas, head of the client solutions group at Insight Investment; added: “The teams at Insight and TPTIM have built a strong partnership, working together on a rigorous design process which has resulted in the creation of bespoke hedges for TPTIM’s individual schemes.”
Bektas said the Insight team took care to ensure the overall solution is focused on delivering the outcomes that scheme members need, with attention paid to efficient management of costs and the implementation of a straightforward framework for monitoring and execution.
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