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Pension funds invest a large part of their assets in long-term investments. But the yields for these are at historically low levels. Can better results be achieved with active management?
By Patrick DUNNEWOLT and Jeroen van BEZOOIJEN, PIMCO
Pension funds have a matching dilemma: A large part of their assets is invested in long-term bonds and swaps to cover interest rate risk and to keep the VEV within the limits. But the yields for these investments are at historically low levels of 1-1.5%. This means that passively acquiring these instruments is tantamount to locking in a negative real yield for decades on a large part of your portfolio.
You can achieve better results with active management. Our active LDI (Liability Driven...
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