Insights

Changing Your LDI Manager

As schemes mature, the accuracy and efficiency of an LDI portfolio become increasingly important. It is, therefore, vital that schemes do not feel limited to the LDI solution and service provided by their incumbent manager. There is often apprehension about the perceived complexity of changing an LDI manager, and we seek to address some of these concerns, for both pooled and segregated mandates.

Senior LDI Portfolio Manager

We have heard consultants and pension schemes compare the process of changing their LDI manager to going through a divorce — expensive and messy! We, however, believe it is closer to upgrading your phone — finding the best package tailored to your requirements,at the right price and with the best service.

As LDI mandates and their implementation have changed over time, it is much easier and less costly now to move mandates from one manager to another, for both pooled and segregated accounts. These changes include a move away from swaps-based to gilt-based hedging for many schemes. Where swaps-based hedging is still in place, the widespread move away from bilateral swaps and non-cash CSAs towards cleared swaps and standardised legal agreements has materially reduced transaction costs.

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