Insight’s LDI Solutions Plus is an innovative range of pooled funds created to help UK defined benefit pension schemes manage the risks inherent in their unique liabilities with a high degree of precision. These funds offer our clients and their advisers a comprehensive set of building blocks that can be used to meet a wide range of funding requirements.

Investment philosophy and process

Our LDI philosophy is based on the belief that the most effective investment strategies for clients are those where:  

• The benchmark for a client’s assets is their unique liability cash flow profile.
• Unrewarded and unintended risk is minimised.
• Active investment risk is managed with diversification and precision to generate returns over liabilities.

LDI solutions typically comprise two basic elements: a liability matching component and a return seeking (or ‘growth’) component. Our range of LDI pooled funds aim to provide a solution for the liability matching element whilst leaving the return-seeking element untouched as far as possible. This enables schemes to manage their unique liability risks effectively whilst at the same time retaining the ability to target an increase in solvency through their return-seeking strategies.

There are 30 individual funds, divided into three ranges: nominal, LPI (limited price indexation with a floor of 0% and cap of 5%) and RPI (retail price inflation). Each range is designed to replicate one of three types of pension increase that clients may be required to pay. For example, the range of ten RPI funds generate annual cash flows that are designed to increase in-line with retail price inflation for each consecutive five-year period between 2011 and 2060.

Each fund has an exposure to liquid or near cash instruments together with interest rate and/or inflation swaps which are designed to provide cash flows at specific maturity dates. The diagram below illustrates the full range of funds: