A Case For Cashflow Driven Investing (CDI)

  • Many pension schemes face challenges in meeting obligations amid difficult market conditions, therefore liquidity planning is an important consideration as schemes mature.
  • At State Street Global Advisors, we have a long heritage of fixed income investing and providing pooled and bespoke solutions for clients.
  • Our CDI approach is built around three pillars: a low risk/low governance approach, an investment process that benefits from both quantitative and fundamental insights, and a rigorous ESG screening process

Pension Scheme Challenges

Pension schemes today face a variety of challenges. Recent years have seen trustees and corporate sponsors exploring ways of managing and reducing risks as they meet their obligations to members. A prolonged period of low interest rates, combined with high levels of volatility sparked by the COVID-19 pandemic, have provided challenges for scheme funding levels.

Schemes must effectively manage risks and achieve a degree of certainty over their future cashflows. In this regard, CDI is useful for schemes of all sizes. Indeed, larger schemes have used this approach for some time using segregated mandates. The introduction of pooled structures has resulted in CDI strategies being open to small and mid-sized schemes as well.