Cash-flow Driven Investment | Institutional Masterclass

23/05/2018

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In this Asset TV Institutional Masterclass video, Colin Fleury, Head of Secured Credit, takes part in a panel discussion alongside other industry experts.

Areas of discussion include the cashflow-driven investment (CDI) landscape, why CDI has grown in popularity, how fiduciary management can sit alongside this type of approach and the challenges presented by transfers out of Defined Benefit pension schemes.

Key takeaways:

  • The cash-flow challenge faced by pension schemes is not going to improve. For the majority of schemes in existence, this negative cash-flow position, which is driven by an increasing value of benefit payments out of the scheme compared with contributions and investment income, will continue to increase year on year
  • Rather than regarding CDI as a new investment strategy, Colin views it as a natural evolution of traditional investment approaches such as Buy & Maintain Credit, seeking to deliver a defined cash-flow profile without needing to sell assets to achieve this.
  • One of the challenges for CDI so far has been that it is viewed as a new product. This isn’t the case and CDI should instead be viewed as a change of investment approach which complements traditional asset and liability management, including how risks are viewed from the pension scheme perspective and the way investment managers tackle these risks by investing in a range of complementary assets.



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