To hedge, or not to hedge, that is the question.




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Barbara Wilson This email address is being protected from spambots. You need JavaScript enabled to view it.




With scope for long-term interest rates to rise, using swaptions as part of a River and Mercantile 'smart' hedge can provide the answer.

At a glance

  • Liability hedging has been very profitable for schemes which implemented it over the past decade.
  • The downside of this strategy is the regret trustees will feel if interest rates rise, and liabilities fall.
  • We can use ‘swaptions’ as part of a smart hedging strategy to reduce this regret risk whilst keeping liability hedge protection in case interest rates fall further.
  • There is a premium cost for a strategy like this, but if your view is that rates will rise, then this is a risk-controlled way of expressing this view.
  • We believe interest rates are currently too low, and an increase in global growth expectations could precipitate interest rate rises over the next 12-18 months.

Executive summary

Many UK pension schemes have now become comfortable with the concept of hedging liabilities against movements in interest rates and inflation, otherwise known as Liability Driven Investment, or LDI. But the big downside of this strategy is that pension schemes don’t benefit from falling liabilities if interest rates rise. With long term interest rates reaching all-time lows recently, is there any way a scheme can both be protected if interest rates fall further, but also have the benefit of improved funding if interest rates rise? Yes, there is. And in this note, we explain how this can be achieved.

To hedge, or not to hedge, that is the question

Liability hedging has been the saviour of many pension schemes over the past few years. It is a fundamental part of a pension scheme investment strategy to help protect funding positions from volatile interest rate and inflation movements. As interest rates fall, the value placed on liabilities rises. The principle of liability hedging is to provide an asset that also rises in value to help the assets mirror the movement in the liabilities and stabilise the funding position.

As interest rates have been on a steady downward trend for a long time, these strategies have created enormous value for pension schemes. Many a pension scheme has faced the dilemma of whether to hedge when interest rates are at “all-time lows”. This is because if interest rates rise, the value placed on liabilities will fall, and if you have hedged, the value of assets will fall in lockstep. This is often known as “regret risk” – the risk of regretting the hedge you put in place because it fell in value. If you feel confident that interest rates will rise significantly, it might be better to not hedge liabilities and therefore benefit from a significant improvement in funding if the rate rise occurs. But that is only if your view on interest rates is right. If you are wrong, then the effect on the funding position could be disastrous. For most pension schemes, this risk is one that is too large to bear, and regardless of the level of interest rates, removing interest rate exposure is the priority.

Our current interest rate views

No one can be sure interest rates will rise, but from current low levels, we believe there is a greater chance interest rates will increase significantly from their low levels across the developed world, including UK interest rates and gilt yields. These rises will be further supported in the UK when any Brexit conclusion is reached. We are particularly considering longer-term bond yields, 10- and 20-year yields that affect pension scheme liabilities, rather than the base rate set by the Bank of England.

The main driver for interest rates rises is likely to be an improvement in the outlook for global growth, and hence investors are likely to move away from ‘safe haven’ assets such as government bonds, reducing demand. Further fiscal spending by governments (such as infrastructure spending) also acts to influence interest rate movements by increasing the supply of bonds as government borrowing increases. Reducing the demand for government bonds combined with increasing supply will allow long term interest rates to rise.

Smart hedging using ‘swaptions’

What if we could take advantage of interest rates rising whilst also being protected from interest rates falling? This would be a panacea – the full protection of a liability hedge, without the regret risk. And it is possible, although at a cost, but perhaps a bearable one. Here we consider the concept of ‘swaptions’ which can be used to achieve exactly this result.

A swaption is an option on a swap, but in this note, we are not going to explain the mechanics of how this works. We are going to focus on the costs and benefits of the strategy.

We have used swaptions with our clients for many different purposes over the years. The strategy covered in this note is designed to remove liability hedging, but only if interest rates rise significantly. This creates the result or ‘payoff profile’, every pension scheme would like – the ability to benefit from interest rate rises, whilst also being protected from interest rate falls. It’s simply smarter.

An example smart hedging strategy

As with any option, such a payoff profile has a cost, a ‘premium’. The exact cost and return will depend on the design of the strategy.

Clients of River and Mercantile Derivatives have bespoke liability hedging that allows use of this smart hedging strategy, designed and tailored to meet your desired outcomes. If you are a fiduciary client and have delegated liability hedging decisions to us, we are already considering how to implement this on your behalf.

As an example, we might consider a strategy where if interest rates fall, then your hedging is retained. But if interest rates rise by 0.25% more than is implied by market pricing over the next year then liability hedging is simultaneously reduced by 10% of total assets.

To help pay the ‘premium’, we might also sell some swaptions which reduce hedging by 10% if rates fall by more than 0.75% over the next year. We get paid a premium for selling this, and if interest rates are 0.75% lower than current levels, we think we’ll be happy to have a lower level of hedging, given it is very unlikely they will stay that low. This part is, of course, optional as it would expose the scheme to risk if interest rates fall by more than 0.75%.

Implementing a strategy like this will cost about 0.2% of total assets. The potential benefit is 1% of scheme assets. Given our view that interest rates are likely to rise significantly, a strategy with an expected downside of 0.2% for an expected upside of 1% seems attractive.

The expected payoff profile for this example strategy is illustrated in the following graph:

Source: River and Mercantile Solutions, Bloomberg. Rate move considers the 20-year swap rate and is relative to the move that is already priced-in to the swap curve over the next year.

The pros and cons of smart hedging

The primary reason for putting a strategy like this in place is to express a view that interest rates will rise and allow the funding position of the scheme to improve if they do. It’s a less risky way of expressing this view that just reducing liability hedging outright, but it comes at a cost.

The biggest downside is if interest rates don’t rise over the term of the strategy (in our example, one year) then you may wish you hadn’t paid that premium. Regret risk again, but this time only for the size of the premium, and if there are very extreme falls in interest rates.

Other things to consider would be:

  • Complexity: do the Trustees have the governance budget to consider, monitor and own a decision like this? Of course, your River and Mercantile adviser will be on hand to help every step of the way. For fiduciary clients, decisions over the level of liability hedging and use of swaptions may be delegated.
  • Counterparty risk: As with all derivatives, the positions will need to be collateralised daily to ensure the bank is good for the money they owe the scheme.
  • Timing of implementation: our view is that interest rates are likely to rise over the next 12-18 months, but that has already started to happen. Sometimes markets move a lot more quickly than we expect and then the risk and return profile of this strategy may change. It can always be re-designed, but the view on rates may be less clear if they have already risen by 0.5-1% from the time of writing.
  • Swap/gilt spread: swaptions are options on swaps, not on gilts. Gilts and swaps don’t always move in exact lockstep. This could work for or against you, but as most schemes have at least 10% of liability hedging in swaps, this should be well mitigated.
  • Term: these swaptions have a term, in our example of one year – i.e. the strategy will work if the rises in interest rates occur at maturity in one year. If interest rates rise as we expect but do so tomorrow instead and then fall back before the year is up, then the benefit of the strategy will be reduced or possibly negated.
  • The swaps on which the swaptions are based will have a defined duration. The duration can be selected to broadly match the duration of the liabilities and for most schemes, this will be around 20 years. However, it would not be practical to implement swaption at a wide range of durations to match the structure of the liabilities. This leaves the risk that interest rates do not rise at the 20-year point where the swaptions are focused but do at, say, the 10 and/or 30-year terms.

Conclusion

Liability hedging has been a very profitable strategy for many pension schemes, particularly over 2019 so far. With interest rates hitting extreme lows in the Autumn we believe the regret risk of having a full liability hedge is increasing. Interest rates, particularly longer-term bond yields, are likely to rise if global growth expectations improve, which we expect over the next 12-18 months, if not sooner. Therefore, we can design strategies which enable schemes to benefit from this, using swaptions as part of a smart liability hedge. In exchange for a premium paid, the pension scheme can get an improved funding position if interest rates rise, but without the risk of additional deterioration of interest rates fall. The design of a shaped strategy for the liability hedge can be bespoke to each client, their risk appetite and circumstances, and the strength of any view at the time of implementation.

Please ask your usual R&M consultant if you would like training on swaption or our smart hedging strategy.

As always, please contact your advisor with any question you may have.

For further information, and training, please speak to your usual River and Mercantile contacts.

Jargon buster

  • Option – a derivative contract that allows the owner to buy/sell an underlying security at a pre-agreed price at a future date
  • Premium – is the cost of entering into an option
  • Payoff – the profitability of an option under different price conditions of the underlying security
  • Swap – a contract where two parties exchange (or ‘swap’) cashflows on two different financial instruments
  • Swaption – a derivative contract that provides the option to enter into a swap (typically on interest rates) at a future date



Ross Leach, R&M Solutions - "In this note, we have described rates as rising or falling but in practice, these moves are relative to the forward curve which may already price-in a rate rise. However, for the terms we are considering, the rises priced-in are minimal. For example, the 20-year swap interest rate is expected by the market to rise by around 0.01% over the next year."


River and Mercantile Solutions, December 2019.

This content has been issued and approved by River and Mercantile Solutions, a division of River and Mercantile Investments Limited which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is a subsidiary of River and Mercantile Group Plc (registered in England and Wales No. 04035248).

Please note that all material within this communication is produced by River and Mercantile Solutions and is directed at, and intended for, the consideration of Professional clients only within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). Retail clients must not place any reliance upon the contents.

The information expressed has been provided in good faith and has been prepared using sources considered to be reliable and appropriate. While this information from third parties is believed to be reliable, no representations, guarantees or warranties are made as to the accuracy of information presented, and no responsibility or liability can be accepted for any error, omission or inaccuracy in respect of this. This document may also include our views and expectations, which cannot be taken as fact.

The value of investments and any income generated may go down as well as up and is not guaranteed. An investor may not get back the amount originally invested. Past performance is not a guide to future performance. Changes in exchange rates may have an adverse effect on the value, price or income of investments.

This document is confidential and is intended for the recipient only. It should not be distributed to any third parties and is not intended and must not be, relied upon by them. Unauthorised copying of this document is prohibited.

A Spectrum of Delegation

Note 1: “River and Mercantile Solutions returns” represents the aggregated returns of the return seeking assets, including liability hedging solutions, of the set of our fiduciary management clients that have comparable investment strategies.

Note 2: Some figures are affected by rounding.

Note 3: For the avoidance of doubt, 22% is the amount which annualised River and Mercantile Solutions returns have outperformed annualised equity returns between January 2004 and March 2009, and 24% is the amount by which annualised River and Mercantile Solutions returns have outperformed annualised equity returns between October 2007 and November 2016.

Source: River and Mercantile Solutions, Bloomberg

Best DB Consultancy 2016

20 May 2015

P-Solve, part of River and Mercantile Group, is pleased to announce that it won two awards at the Pensions Expert Pension and Investment Provider Awards (PIPA) held on 20 May. The PIPAs recognise excellence among providers of products and services to UK workplace pension schemes and the three key criteria used to adjudicate the awards are performance, innovation and service standards.

P-Solve was named Best DC Investment Provider of the year for its innovative use of segregated custody accounts.

The business also won an award for Best Fiduciary Manager of the year for its expansion into DC and success widening the DC investment opportunity set through ETFs and the ability to use less liquid investments.

Commenting on the awards Britt Hoffmann-Jones, Managing Director, DC Solutions at P-Solve said: “We are very proud to receive recognition for our hard work on the DC side. These awards are a result of listening and responding to our clients’ changing needs. We first developed our fiduciary management service for DB schemes in 2003, to help clients manage our clients growing governance burden. Following a wave of new regulation and best practice, clients identified similar governance constraints for DC. So, we extended fiduciary management to DC schemes in 2011. Delegating dayto- day investment can help our trustee clients manage their time better – for example, by freeing them up to spend more time on governance and member communication. It is worth remembering that the suitability of a fiduciary approach depends on the trustee board.”

How the EDOS looked on 6 February 2013

Strategy

Chart

Risk management is key

sample chart

Integrity is critical to everything we do. Any perception of us operating without this quality will destroy our business. Clients need to trust the professionals on which they rely.
We believe authenticity should be recognised, rather than claimed and our belief that we offer this comes from the fact that it is mirrored back to us in our many conversations. We are candid and straight-talking and we know this because our clients, colleagues and competitors tell us so.
Respect informs all our behaviours – especially in difficult and challenging situations, where we need to discover the right solution. Our people know to frame their views in a way that shows respect for the individual concerned and the context of the discussion.
Citizenship is a broad but not necessarily woolly term. We believe it is a visible principle to support the best of what we do inside our company but also supports our desire to make a difference and create genuine benefit for others in our wider, commercial dealings.
We expect people to be open – not hiding information, or their views. We expect people to be straight-talking, particularly the leaders who drive and develop our business and bring our people along with them. Importantly, we believe in a constructive working environment.
We expect people to be passionate in a table-thumping way about clients’ success. The alternative is clear if we don’t – we won’t keep them and our competitiveness will drain away. The acid test for being passionate is whether or not our clients feel it, too. Our creativity and the strength of our relationships tells us they do.
We should be stretching ourselves - and each other - to be the best we can be. The starting point is to challenge, develop and achieve excellence in all we do. We set high standards and are intolerant of mediocrity. To this end, we are restless in creating the conditions in which we and our clients thrive.
Creativity is critical to our value proposition. We need to keep re-inventing ourselves to achieve our growth objective and to avoid uniformity. We seek to reward people who are creative, who involve others, who encourage higher quality input and are comfortable in challenging. We understand that, if the business is to reach out to more great people, they won't always be told what to do but will be intellectually receptive to being persuaded by superior argument. For us, it's the quality of the debating stance taken, not the title of the person making it.
While this is important, it means more to us. It is critical that, in our day-to-day dealings, both we and our clients benefit. To this end, we should not take risks in relationships where only one side is rewarded and we will be forthright in guarding against this eventuality. In day-to-day terms, it’s also how we organise our time, prioritise our work and assess new projects and development. The value of being commercial equates to creating value for all. It’s about balancing risk and cost against the potential of reward.
Ajeet Manjrekar

Co-Head of UK Solutions

Ajeet focusses on working with trustees to understand their specific investment and governance needs in order to design innovative solutions to achieve their funding objectives.

As a qualified actuary with extensive experience in both investment consulting and asset management, Ajeet is part of the senior management team with responsibility for the quality and evolution of our client-driven services.

He has extensive experience bringing together teams from different backgrounds to address unanticipated but emerging client needs. Examples have ranged from designing capital protection solutions for Defined Contribution schemes, to helping foster US pension schemes’ usage of liability-driven investment. Recognising that ideas can travel – that solutions arising in one region or part of the market can frequently be applicable elsewhere – he harnesses the expertise and insights of team members from across our business to solve the client problem, whatever it might be.

He re-joined us in 2016 having spent the last few years in Deutsche Bank’s asset management businesses. Prior to that he was a lead investment consultant advising several of our defined benefit and defined contribution clients.

Ajeet has a degree in Mathematics from Warwick University.

Barbara Saunders

Head of Client Engagement

Barbara has overall responsibility for client engagement with River and Mercantile Solutions, focusing on maintaining and improving our clients’ experience of the business. In this capacity she is involved with all our clients, but in addition she leads the teams advising eight defined benefit pension schemes, ranging in size from £70m to £2bn.

These include clients for which we act as an investment consultant, and clients that have appointed us as fiduciary manager. Over her career to date she has in-depth experience of working with many more clients, including larger DB schemes, DC schemes, sovereign wealth funds and charities.

Barbara has significant experience of providing advice across the full range of investment considerations. This demands a grasp of detail, and the ability to understand that detail in its proper context, and the decisiveness to make definite recommendations on the basis of that understanding . But it also requires an aptitude for conveying that understanding to others, and for persuasion. This can prove crucial when significant investment decisions are required within a fairly short timeframe, but it relies on her ability to develop trust with her clients over the long-term.

Barbara’s investment expertise is reflected also in her role as a leading member of the Investment Strategy Committee, which sets the house view on investment and strategic considerations for our DB clients. She has a particular depth of understanding of liability hedging, having spent the early part of her career modelling and trading LDI strategies for DB pension schemes.

Barbara is a qualified actuary.

She graduated in 2004 with first class degree in Mathematics from Royal Holloway, University of London, and obtained a Post Graduate Diploma in Actuarial Science from Cass Business School.

Barbara joined River and Mercantile Solutions in 2007.

Jack Berry

Global Head of Solutions

Jack is responsible for providing River and Mercantile Solutions with strategic direction across all of its advisory businesses, ranging from defined benefit (DB) and defined contribution (DC) pension schemes to insurance companies , in the UK and US.

He is also the lead adviser on several DB scheme clients. These include clients that retain River and Mercantile Solutions as an investment consultant, and those that employ it as a fiduciary manager. He has experience as adviser to numerous DB schemes with assets of between £25m and more than £5bn.

His clients appreciate his strong understanding of the interplay between, on the one hand, a sponsor’s need to contain its pension-related risk and, on the other, a trustee board’s need to develop an investment strategy. Likewise, they value his ability to communicate to trustee boards and other advisors on the design and implementation of complex solutions, including equity derivative strategies and liability-driven investment (LDI). He is also able to draw on his international experience in prior roles and with River and Mercantile Solutions’s advisory business in the US, when advising his clients.

Within River and Mercantile Solutions, he has led work on the use of derivatives in LDI and structured equity, playing a leading role establishing River and Mercantile Solutions’s bespoke solutions business. He has also been actively involved in the development of River and Mercantile Solutions’s US advisory business since 2007. He joined River and Mercantile Solutions in 2004.

Jack is a chartered accountant. After working as an audit manager at Ernst & Young Zimbabwe and then in the corporate finance team at Standard Chartered Merchant Bank, in 1995 Jack co-founded a corporate finance and structured finance advisory business, Real Africa Durolink Zimbabwe, as a subsidiary of Real Africa Durolink, a listed South African Bank. Jack was one of the founding executive directors of Real Africa Durolink London when this subsidiary was started in 1999.

Jack graduated as a Bachelor of Accounting Sciences from the University of South Africa and holds a Masters in Finance from London Business School. He is a member of the Zimbabwe Institute of Chartered Accountants.

Matt Way

Chief Operating Officer

Matt is a chartered accountant who began his career at Ernst & Young in 1989 before moving to Lehman Brothers, where he worked for nine years, until 2007. From there he moved to Bear Stearns and then to Man Group, where he worked for five years with Kevin Hayes, who is now River and Mercantile Group's chief financial officer. Matt joined River and Mercantile Solutions in 2015 following roles at RBS and London Clearing House.

Matt has gathered substantial experience in business partnering, applying financial, commercial and practical judgement to all operational issues including product viability, forecasting, operational infrastructure, risk controls and compliance. At River and Mercantile Solutions he takes lead responsibility for efficient operation and effective risk management of the advisory and fiduciary management divisions.

He has senior management experience managing large teams and engagements across multiple businesses and support functions. He has a focus on change management and project management, which he has used to deliver simple, practical and innovative solutions and to enhance efficiency. He coordinates diverse teams and functions to solve problems as they arise.

Patrick O’Brien

Investment Director

Patrick leads the investment team, which is responsible for delivering River and Mercantile Solutions’s fiduciary management services to clients. His team conducts on-going investment research, performance monitoring and risk tolerance management, implements asset allocation decisions, and conducts execution trading and transition management.

Patrick is responsible for supervising all of this. Above this, he is a member of the Investment Committee and he chairs the Multi-Asset Committee, which between them determine River and Mercantile Solutions’s views on which asset classes to under/overweight and which investment managers to invest with. He therefore plays an important role in the formation of investment decisions, both from month-to-month and, when financial market conditions dictate, intra-month.

Patrick also has lead responsibility on two defined benefit pension scheme clients, both with assets in the range £100m to £250m. One of these retains River and Mercantile Solutions as its investment consultant while the other is a fiduciary management client. In this capacity, Patrick plays a pivotal role advising trustees on investment strategy, introducing investment ideas and risk management ameliorations to the trustees, and giving them appropriate training to enhance their governance capabilities.

Patrick began his financial services career as an operations associate at Legal & General, following two years in manufacturing industry. He graduated from University College Cork with a BSc in Finance.

Patrick joined River and Mercantile Solutions in 2008.

Ross Leach

Co-Head of UK Solutions

Ross is Co-Head of UK Solutions, where since 2004 he has acted as a lead investment consultant to the trustees of defined benefit pension schemes and to corporate sponsors.

He has experience of clients with assets ranging from £50m to more than £5bn, and across River and Mercantile Solutions and his former employer he has client relationships that have lasted more than 15 years. This calls on his skills to understand the needs of clients, to understand investment strategies and products, and to match the latter to the former in the simplest but most effective way possible.

Some of his clients retain River and Mercantile Solutions as their investment consultant while others have adopted a fiduciary management approach. He has supplied advice that has taken schemes to buy-out, and is currently working with a number of schemes that are focused on reaching a self-sufficiency target over the next 10 to 15 years.

Ross is a member of River and Mercantile Solutions’s Investment Strategy Committee. This committee is instrumental in developing client advice, and has the final word on whether a particular investment product is fit for recommendation to clients.

Ross, who joined River and Mercantile Solutions after four years at Punter Southall, the company’s former parent, has a degree in Mathematics and is a Fellow of the Institute of Actuaries. He has worked on a number of actuarial working groups.

Pensions Insight DC Awards 2016 – Best Default Fund Strategy

26 October 2016

P-Solve, part of River and Mercantile Group, is pleased to announce that it won an award at the Pensions Insight DC Awards 2016 held on 26 October. The Pensions Insight DC Awards 2016 and are designed to celebrate the excellent work done by defined contribution providers and schemes up and down the country.

P-Solve was named Best Default Fund Strategy as the judges stated they were impressed with how P-Solve adapts the strategy at retirement to allow for Pension Freedoms in a flexible way to meet the needs of different schemes’ members, and also the intelligent life-styling approach using blended funds.

Commenting on the award Niall Alexander, Director, P-Solve, said: “This month P-Solve celebrates its five year anniversary in DC fiduciary management. The award win reflects the hard work and results we have achieved on behalf of our DC clients (and specifically their scheme members) in that time, as we have sought to offer flexible solutions to the challenges facing trustees. Wanting to improve financial security for as many people as possible by thinking more deeply about investment than anyone else is central to our business.”

Engaged Investor Trustee Awards – Best DB Consultancy 2016

7 July 2016

P-Solve, part of River and Mercantile Group, is pleased to announce that it won an award at the Engaged Investor Trustee Awards held on 7 July, celebrating excellence among pension scheme trustees and their providers and advisers.

P-Solve was named Best DB Consultancy 2016 as the judges said they were impressed by P-Solve’s innovation and service. The firm’s submission emphasised the work P-Solve has done developing tailored investment solutions for small and medium-sized pension schemes, as well as large ones.

Commenting on this year’s award Ross Leach, Managing Director, P-Solve, said: “We are very proud to receive this award and the recognition of the hard work on behalf of our DB clients it represents. We strive to understand the challenges facing trustees and offer a range of services to provide real insight and support for our clients.

Pensions Age Awards – Multi-Asset Manager of the Year 2016

25 February 2016

P-Solve, part of River and Mercantile Group, is pleased to announce that it won the award of Multi-Asset Manager of the Year at the Pension Age Awards held on 25 February. The Pensions Age Awards were launched to reward both the pension schemes and the pension providers across the UK that have proved themselves by demonstrating excellence, sophistication and innovation in all aspects of what they do.

According to the judges, this firm has demonstrated its understanding of the multi-asset space by combining experience with skill in order to produce an investment offering well suited to the needs of today’s DB and DC markets – plus it has the performance to show its approach works.

Engaged Investor Trustee Awards 2015 – Best DB Consultancy 2015

2 July 2015

P-Solve, part of River and Mercantile Group, has been named Best DB Consultancy at the 2015 Engaged Investor Trustee Awards. The judges said they had been impressed by P-Solve's involvement in dynamic investment opportunities.

In addition to firm’s success, P-Solve client The Cheviot Trust won the Best scheme report and accounts category at the ceremony held on 2 July 2015, impressing the judges with its excellent design and well-executed graphics.

The award win is the latest in a number of recent successes for P-Solve having been named Best fiduciary manager and Best DC investment provider at the Pensions and Investment Provider Awards.

Commenting on the award, Jack Berry, global head of solutions at P-Solve, said: “We are very proud to receive this award and the recognition of the hard work on behalf of our DB clients it represents. We strive to understand the challenges facing trustees and offer a range of services to provide real insight and support for our clients.

"Wanting to improve financial security for as many people as possible, by thinking more deeply about investment than anyone else, is central to our business. We are proud that our work with pension schemes gives us us the opportunity to help more than 400,000 individuals.”

Pension Investment Provider Awards (PIPA) – DC Investment Provider 2015

20 May 2015

P-Solve, part of River and Mercantile Group, is pleased to announce that it won two awards, DC Investment provider and Best Fiduciary Manager 2015 at the Pensions Expert, Pension and Investment Provider Awards (PIPA) held on 20 May. The PIPAs recognise excellence among providers of products and services to UK workplace pension schemes and the three key criteria used to adjudicate the awards are performance, innovation and service standards.

P-Solve was named Best DC Investment Provider of the year for its innovative use of segregated custody accounts.

Commenting on the awards Britt Hoffmann-Jones, Managing Director, DC Solutions at P-Solve said: “We are very proud to receive recognition for our hard work on the DC side. These awards are a result of listening and responding to our clients’ changing needs. We first developed our fiduciary management service for DB schemes in 2003, to help clients manage our clients growing governance burden. Following a wave of new regulation and best practice, clients identified similar governance constraints for DC. So, we extended fiduciary management to DC schemes in 2011. Delegating day-to-day investment can help our trustee clients manage their time better – for example, by freeing them up to spend more time on governance and member communication. It is worth remembering that the suitability of a fiduciary approach depends on the trustee board.”

Pension Investment Provider Awards (PIPA) – Best Fiduciary Manager 2015

20 May 2015

P-Solve, part of River and Mercantile Group, is pleased to announce that it won two awards, DC Investment provider and Best Fiduciary Manager 2015 at the Pensions Expert, Pension and Investment Provider Awards (PIPA) held on 20 May. The PIPAs recognise excellence among providers of products and services to UK workplace pension schemes and the three key criteria used to adjudicate the awards are performance, innovation and service standards.

P-Solve was named Best Fiduciary Manager of the year for its expansion into DC and success widening the DC investment opportunity set through ETFs and the ability to use less liquid investments.

Commenting on the awards Britt Hoffmann-Jones, Managing Director, DC Solutions at P-Solve said: “We are very proud to receive recognition for our hard work on the DC side. These awards are a result of listening and responding to our clients’ changing needs. We first developed our fiduciary management service for DB schemes in 2003, to help clients manage our clients growing governance burden. Following a wave of new regulation and best practice, clients identified similar governance constraints for DC. So, we extended fiduciary management to DC schemes in 2011. Delegating day-to-day investment can help our trustee clients manage their time better – for example, by freeing them up to spend more time on governance and member communication. It is worth remembering that the suitability of a fiduciary approach depends on the trustee board.”

Pensions Consultancy of the Year 2017

24 February 2017

P-Solve is pleased to announce that it was awarded Pensions Consultancy of the Year at the Pension Age Awards 2017. The awards, now in their fourth year, aims to reward both the pension schemes and providers across the UK that have proved themselves worthy of recognition during increasingly challenging times.

The award recognises P-Solve’s bold approach to investment consulting since the business’s launch in 2001. This included, last year, the introduction of swaptions strategies for clients, allowing them to “get paid” for making strategic risk management decisions.

The panel of judges stated: “This firm stood out for its proactive approach and its use of innovation in a challenging marketplace. Its clear understanding of the investment hurdles facing its clients and its ability to help these clients, whatever their size, through the investment maze set it apart from the rest.”

Commenting on the award Barbara Saunders, Head of Client Engagement at P-Solve, said: “We are very pleased to have received recognition for the innovative investment solutions we can deliver. We are perhaps better known for being one of the pioneers of fiduciary management, but the investment intel that this gives us is applied equally to clients we advise. Ultimately, we look for the best solutions to our clients’ needs, and with clear explanations, our clients are able to act quickly when required. In turbulent times, opportunities arise, and you need to be fleet of foot to take them. We all know pension schemes need return, and we constantly search for ways to help them earn it.”

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Kevin Hayes

Global Head of Solutions

Kevin is Global Head of Solutions and Group CFO at River and Mercantile. He is an international CFO with 25 years' experience in financial services. Kevin began his career at Ernst & Young and was a Partner in the New York office covering financial services audit and consulting clients.

He moved to Lehman Brothers where he held various roles including: Global Capital Markets Controller, International CFO for Europe and Asia, and Head of Productivity and Process Improvement.

In 2007 Kevin joined Man Group PLC in London as Group CFO and Executive Director on the Group Board. He was also a trustee of the Man Group PLC Pension Plan.

Kevin has degrees in accountancy and law from Victoria University in New Zealand and is a Certified Public Accountant in the US.