The Pension Trustee's Investment Guide

Overview

Designed as a practical, easy-to-follow guide to the new financial environment in which pension trustees are learning to operate, it provides them with a set of working definitions, and the financial techniques and tools they need in order to improve their returns and safeguard their risks.

It summarises the latest thinking and tech-niques in traditional assets, such as equities, bonds, property and cash, and examines the potential for investing in less conventional asset classes, such as hedge funds, private equity and commodities, where both rewards and risks can be high.

Understanding financial markets

Far too many pension trustees – even in large funds – have an inadequate understanding of investment and financial markets. This book – tailored specifically for pension fund trustees – fills an important knowledge gap.

Designed as a practical, easy-to-follow guide to the new financial environment in which pension trustees are learning to operate, it provides you with a set of working definitions, and the financial techniques and tools needed in order to improve returns and safeguard risks.

It summarises the latest thinking and techniques in traditional assets, such as equities, bonds, property and cash, and examines the potential for investing in less conventional asset classes, such as hedge funds, private equity and commodities, where both rewards and risks can be high.

This is part of our series of Company Secretary training courses covering the essential skills and best practices for all company directors and company secretaries, as well as business leaders and entrepreneurs.

Reviews

Endorsed by The Pensions Management Institute

The Pension Trustee’s Investment Guide has been endorsed by the Pensions Management Institute, the professional body for those working in the field of pensions and employee benefits..

For further details on trustee innovations and awards, go to the The Pensions Management Institute website.

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Content

Part 1 The trustee as investor

1. The trustee’s role

• Trust and regulation
• Knowledge and understanding

2. Scheme funding

• The valuation
• The sponsoring employer
• The recovery plan
• Schedule of contributions
• Funding statements

3. Powers to invest

• Suitable care
• Limitations
• Proper advice
• Statement of investment principles

4. Asset allocation

• Prudent portfolios
• New thinking
• The starting point
• Asset classes

Part 2 Core assets

5. Quoted equities (shares)

• Future returns
• Growth or value
• Large cap or small cap
• Performance measures
• International switch
• Passive or active
• Investment styles
• Held to account

6. Bonds

• Fixed income
• Other types of bonds
• Yields and price
• The yield curve
• Economic risks
• Credit risks

7. Property 

• Returns
• Capital intensive
• Direct or indirect
• Local or international

8. Cash

• Interest rates
• The instruments

Part 3 Alternative assets

9. Private equity

• Investment vehicles
• Venture capital
• Buy-outs
• Costs
• Returns

10. Hedge funds

• Investment techniques
• Investment strategies

11. Commodities

• The market
• The contracts
• Trading the index

12. Infrastructure

• Asset qualities
• Risks
• Channels

Part 4 Derivatives

13. Risk instruments

• What they are
• The markets

14. Futures

• The futures contract
• Hedging
• Returns
• Controls

15. Swaps

• How they work
• Use by pension funds
• Financial position

16. Options

• Calls and puts
• Uses

Part 5 Alternative strategies

17. Liability driven investment

• Liability profile
• Liability matches
• Pooled funds
• Best returns, least risk

18. Multi-asset investing

• A new mindset
• Risk models

19. Portable alpha

• Beta and alpha
• Alpha transfer

20. Pooling

• Common investment funds
• European pooling
• Unit trusts and investment companies
• Limited partnerships

Appendices
I The bluffer’s guide
II The British Pensions System
III Pensions by numbers
IV Bluffer’s cases 193
V Addresses 201
VI Further reading