Fund manager BMO Global Asset Management has expanded its liability-driven investing (LDI) product range with two funds combining credit and LDI.
One fund is a credit matching LDI fund for defined benefit pension funds, which aims to provide a single fund self-sufficiency solution. Around 75% of the fund is invested in physical credit, with the remaining 25% used to create a liability matching overlay. The credit element consists of low turnover, highly diversified, global corporate bonds. Overall, the fund aims to provide Gilt-based liability hedging, steady returns and quarterly inflation-linked income payments.
The other fund is a credit-linked dynamic LDI fund for DB plans that are looking to hedge liabilities, while staying exposed to corporate bond markets. It will use credit default swaps to give passive, diversified, liquid and capital efficient exposure to corporate bond markets. BMO Global Asset Management head of LDI, Alex Soulsby, commented: “We are excited to have launched these innovative credit and LDI funds, which complement our existing LDI range. The funds offer a much-needed solution for pension schemes at different stages of their funding journey.” BMO’s head of UK institutional, Guy Skinner, added: “We have been running stand-alone segregated portfolios like this for many years and so this is another example of the team bringing such strategies to the market in a way that minimises the governance burden and makes them accessible to schemes of all sizes.”