Asset managers seeking actuaries
A new study by consultants Hewitt Associates has revealed soaring demand for inflation swap products as pension funds turn to liability driven investment strategies in an order to manage risk.
The website www.globalpensions.com quotes Andrew Tunningley, head of the UK investment consulting practice at Hewitt, as saying the UK inflation swap market has quadrupled in the past 12 months, to around 12bn.
Kim Yates, co-head of the asset management practice of financial services headhunter Principal Search, says growth in the inflation swaps market is being matched by demand for actuaries with liability driven investment expertise. "All the large fund managers are interested in building their capability in this area," she says. "It is certainly an area of growing interest."
At their most basic, inflation swaps enable pension funds to swap variable payments to scheme members with a bank. In return, funds pay the bank a pre-determined rate of interest. The move increases the visibility of risks and enables funds to plan ahead.
