Portfolio Manager James Briggs and Head of UK Institutional Anil Shenoy explore how trustees can collaborate with their credit manager to ensure their scheme’s allocation to Buy and Maintain corporate bonds is optimised to meet the specified objectives both now and in the future.

Key takeaways:

  • Defined benefit (DB) pension scheme allocations to corporate bonds managed on a Buy and Maintain basis will continue to increase, as schemes reach maturity and approach their long-term objective (LTO).
  • The strategy fulfils several different objectives including generating cash to pay pensions, helping to achieve a scheme’s ESG goals, capturing spread and enhancing overall portfolio diversification.
  • Optimising a portfolio with respect to these different objectives means partnering closely with a Buy and Maintain manager, so that these goals can be fully integrated when constructing the initial portfolio. In addition, the portfolio can evolve as the relative importance of these objectives to a particular scheme change over time.