How can trustees manage their growing governance burden?

I group these holistic management services into three main areas: 

1. Resilience
The liquidity and governance framework around collateral assets has of course been the focus of DB schemes since the 2022 gilt crisis. There are a plethora of collateral assets that schemes typically consider, including asset-backed securities, absolute return bond strategies and short-gated global credit. Even short-dated private credit exposure can form part of waterfall, the implementation of which can be delegated to a holistic asset manager.

2. Efficiency
Cashflow management is not new, but its importance has grown for schemes that are no longer receiving sponsor contributions which used to help with cash management. As such, schemes are looking at traditional CDI assets, but also considering dividends from equities, and using leverage within their LDI portfolio in a bid to smooth their cashflow needs.

3. Adaptability
Schemes are increasingly delegating the rebalancing of their asset allocation, while also designing new strategic asset allocations (SAAs) to reflect different destinations e.g. greater allocations of credit for buyout or private credit for run-on. Indeed, they are also adapting over time, from market-based triggers to client specific funding level triggers.

Our recent webinar covers these three areas and more. My thanks to Lisa Purdy for hosting and Tim Dougall and Nick Lewis, CFA, for the engaging discussion. Towards the end of the webinar you'll discover that I share what else schemes are now focusing on, having delegated some of their governance burden!