United Kingdom

Details

  • Service: Tax, Pensions
  • Industry: Financial Services, Investment Management
  • Type: Business and industry issue, Survey report
  • Date: 17/06/2013

KPMG's 2013 Liability Driven Investment (LDI) Survey 

KPMG finds the LDI market remains dominated by just three fund managers as it grows 11 percent to nearly £1/2 trillion of liabilities hedged in 2012.

 

We have yet again taken the temperature of the LDI market for UK pension schemes and have found that removing uncertainty, where cost effective, and focusing on seeking opportunities for growth appears to be the focus for UK pension schemes, with continued volatility and uncertainty around the direction of interest rates.

2013 KPMG LDI Survey
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Key trends and observations

 

  • LDI now covers £446bn of liabilities, an 11 percent increase over 2012 with 686 UK pension scheme mandates now employing LDI
  • Despite the increase in credible competition, the market continues to be dominated Legal & General, Insight and BlackRock, controlling 90 percent of the industry
  • With 35 percent of mandates having extension triggers in place, any yield reversion should see the industry witness significant growth
  • Given the macro environment and record low nominal yields, it follows that the strongest growth has been in hedging inflation risks
  • The LDI market has witnessed increasing appetite for pension schemes to use wider derivative strategies to capture return seeking exposures such as equity and credit to drive returns as well as hedge risks
  • 80 percent of LDI managers believe their greatest source of new business will be from pension schemes new to LDI
 

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Contact

Simeon WillisSimeon Willis

Senior Manager

KPMG in the UK

 

020 7694 4408

Email Simeon

 

London
Patrick McCoy
Partner
T: 020 7311 2393

 

South
Greg Wright
Director
T: 0118 964 2276
 
Midlands
Ben Gold
Senior Manager
T: 0121 609 6098

 

North
Nick Evans
Partner
T: 0113 2313341

 

Scotland
David O’Hara
Pensions Investment Consultant
T: 0141 300 5533