Interest rate and inflation remain the largest risks to many pension schemes. Therefore they are the most important things to manage correctly. We have taken the view that the best way to organise and manage this risk, while maintaining efficient and effective outcomes, is to own the LDI process by having this as part of our business structure and in-house capabilities.
Dutch pension schemes embraced risk management long before the UK, and are some of the most sophisticated investors in the world. Cardano was purpose-built to meet these advanced pension schemes requirements, using innovative investment solutions, and remains one of the largest risk managers in the Netherlands.
We build bespoke liability driven investment portfolios to help manage the interest rate and inflation risks inherent in the liabilities. We work with your actuaries to understand the structure of the pension scheme and likely cash-flows. From here we build the portfolio which is managed in an ongoing basis with changes made to reflect the changes in the liability profile.
The benefit of having in-house capabilities:
Our size enables us to change the way we hedge without having to go through large implementation programmes across several clients. This should ensure low transaction costs and allow more flexibility when making future changes.
Simple, straight-forward accountability embedded in the LDI process through one relationship means that there is less opportunity for errors and, therefore, unintended losses to occur.
As an in-house manager we know what is happening daily, with all market movements. And can take a holistic view on changes to the portfolio on both the investment and the LDI fronts with immediate effect.
Advice and implementation
We ensure clients receive the most up-to-date and relevant advice on the part of their portfolio that often represents the highest market exposure. We are able to negotiate all derivative documentation on behalf of clients, simplifying the process and helping clients avoid additional legal and consultant fees.
We are very happy to offer training workshops to explain in more detail how LDI can benefit your pension scheme.