UK life insurer Mobius Life has launched a Smart Rebalancing service aimed at ensuring defined benefit schemes’ portfolios remain in line with their chosen asset allocation.

The Smart Rebalancing service automates the process of keeping assets in line with the schemes’ investment strategies and is designed to reduce risk and potential transaction costs for DB schemes. It utilises the cash flows of each scheme every month to rebalance the scheme towards its benchmark holdings.

Mobius Life manufactures a blended fund for each scheme which reflects the liquid assets that would be included in the rebalancing process.

For cash flow-negative schemes, Mobius Life rebalances as the scheme draws down cash, for example, to pay pensions each month. This is achieved by automatically “top-slicing” the most overweight asset classes to pay benefits and bring the scheme back into line.

For cash flow-positive schemes, monthly contributions are automatically allocated to the most underweight asset classes.

“Smart Rebalancing fully automates an essential part of DB scheme management, bringing the process into the 21st century,” said chief executive, Adrian Swales.

“It not only automates the rebalancing process but also significantly reduces the need for rebalancing at the quarter or year end. It also reduces risk and potential transaction costs for DB schemes,” he said.


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Published: April 1, 2020
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