The purpose of this three-day comprehensive course is to help delegates understand the complex world of Pension Investment Strategy with specific reference to:
- Understanding the global pensions crisis
- The challenge to the cult of the equity
- The role and purpose of pension funds
- The different types of pension scheme
- Measuring and modelling a pension liability
- Impact of liabilities on investment strategy
- Pension funding policies
- Asset/Liability management tools
- Pension fund investment strategies
- Dynamic approaches
- Benchmark timing and tactical asset allocation
Who should attend
The course will be of value to professionals in the following areas:
- Fund Managers
- Portfolio Managers
- Pension Fund Managers
- Pension Fund Administrations
- Pension Fund Trustees
- Pension Fund Advisors
- Treasurers
- Pension Fund Sponsors
- Equity and Fixed Income Specialists
- Asset Allocation specialists
- Asset/Liability Consultants
- Investment Advisors
- Private Bankers
Course Objectives
The Global Pension Fund Crisis has placed a question mark over traditional investment theories and strategies that hitherto were considered unchallengeable. This unique programme takes a holistic approach to the complex subject of pensions ranging form pensions fund basis and the different types of pension scheme to more complex issues encompassing pension funding issues, asset /liability management and pension fund investment and portfolio optimisation. New dynamic approaches and strategies to the pension fund investment challenge will be covered.
Day 1
The fundamentals of pension funds
The controversy surrounding pension funds
- The global pensions crisis – European, U.K. and American perspectives
- The pension fund as a financial business
- The link between asset allocation, capital structure and financial risk
- The challenge to the cult of the equity
- The rising costs of funding pension schemes
Case study: The pension fund crisis
Pension fund basics
- The role and purpose of pension funds
- The role and function of the various parties – trustees, sponsors, consultants and investment managers
- The pension fund as financial businesses and as part of the company
- The importance of the pension fund to corporate balance sheets
- Sources of wealth in a pension fund
- The fundamental pension equation
- The pension fund map and organisational structure
- The pension fund balance sheet
- Creating value in pension funds
Case study: A multiple choice test on the basics of the pension fund business and pension fund terminology
The different types of pension scheme
- The principles to be followed in developing scheme’s approach:
- Tailoring an investment strategy
- The risk tolerance of the sponsor
- Which risks to be managed
- Factors influencing investment strategy :
- Risk attitude
- Current solvency
- Impact on sponsoring company
- Age profile of scheme members
- Views on financial markets
- Defined benefit pension schemes
- Defined contribution pension schemes
Day 2
Pension fund assets and liabilities
Pension fund liabilities
- Measuring and modelling a pension liability
- The actuarial value of liabilities
- The liability return as a hurdle rate
- Impact of liabilities on investment strategy
- Liabilities and funding policy
- Risk management and liabilities
- The risk-adjusted change in surplus
- Surplus risk and the risk adjusted change in surplus
- Funding probabilities
Case study: Pension fund liability study
Pension funding policies
- The funding target
- The pace at which the target is attained
- Overall fund risk
- The lack of symmetry in the treatment of surplus and deficit
- The relationship between pension assets and liabilities
Case study: The funding status of a pension fund
Asset/liability management tools
- Current issues in asset/liability modelling
- Static portfolio analysis for asset allocation
- Dynamic portfolio analysis with assets and liabilities
- Dynamic models for asset liability management for defined benefit pension funds
- Developing a strategic benchmark in an asset/liability framework
- Integrated asset/liability management
Case study: Asset/liability management
Day 3
Pension fund investment strategies
Portfolio optimisation
- Portfolio optimisation with drawdown constraints
- Asset & liability management for long term investors
- The importance of the strategic asset allocation decision
- Dynamic portfolio models for asset allocation
- Global equity and bond investing for pension funds
- Currency hedging and modelling techniques
Case study: Portfolio optimisation
Strategic asset allocation
- A brief history of risk and return
- Review of the characteristics of the major asset classes
- “There is no free lunch”
- Portfolio diversification – the importance of correlation
- The efficient frontier, efficient portfolios and optimal portfolios
- The absolute vs. relative return decision for the pension fund
- What is asset allocation and why do it
- The importance of strategic asset allocation
- A comparison of the different approaches to asset allocation
- Benchmarks and benchmarking
Case study: Boots PLC – pension fund : strategic asset allocation and selection of external fund managers
Benchmark timing and tactical asset allocation
- What is tactical asset allocation and why would a pension fund do it
- Defining the dimensions of a tactical framework for pension funds
- Core/Satellite approaches
- The macroeconomic approach to tactical asset allocation
- The valuation approach to tactical asset allocation
- Tactical style and sector rotation
Case study: Tactical asset allocation
Dynamic approaches
- Liability matching strategies – duration matching and cashflow matching
- Strategies with upside – dynamic contingent optimisation and portable alpha
- Limiting the sponsor risk – absolute return and liability hedging
- Generating real returns – new asset classes and real alpha
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The Course Director is a dedicated training solutions provider to the Global Wealth Management and Fund Management industries. He is highly respected for his ability to integrate selling skills training with complex product training in an informative and entertaining style.
He began his investment management career with Abbey Life in Dublin before moving to London in 1985 to work for Irish Life Assurance Plc. At Irish Life, he was responsible for investment product marketing and new fund launches and was responsible for the company's successful entry into the single premium bond market. He joined County Bank at the end of 1986 as Research and Development executive in the unit trust division. In 1987 he transferred to the pension fund department, assuming responsibility for the management and performance of Canadian equity investments. In 1991, he was seconded to the European equity desk to manage a research project on smaller European companies. At the end of 1992, he was appointed head of the North American equity desk.
He has a B.A.(Hons) in Economics and Politics, an M.A. in Development Economics and an M.B.A. in Finance from City University Business School in London. He is the course director and lead trainer on a number of Euromoney training programmes. He has undertaken numerous training assignments throughout Europe, Asia and the U.S.A. for leading private banks and asset managers. In 2007, he founded a boutique asset manager focused on researching and investing in a broad range of emotional assets from fine art and rare stamps to diamonds and classic cars.
Courses run by this instructor
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