We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 05 July 2011
Risk
The starting point for hedging investment risk in a pension scheme is the requirement to understand and manage the drivers of risk.
Firstly, it is crucial to understand those market factors that will exacerbate or reduce the deficit. Secondly, it is vital to manage the impact of those factors as far as possible.
A defined benefit pension scheme is behaviourally extremely complex. In the first place, the various assets held by the scheme have characteristics that can be very distinct: a building owned by the pension scheme behaves differently (in terms of fair value) from a portfolio of equities. A basket of index-linked gilts does not exhibit the same properties as a macro hedge fund or a holding of asset-backed securities. Even within asset classes, different individual assets have distinct characteristics.
To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.
