Case Study: Project Management of Significant Change in a Client's Investment Processes (UK Pension Protection Fund, c. £16bn liabilities)
The Pension Protection Fund has one of the largest hedging programmes in European pensions, using a mixture of derivatives to closely match the sensitivity of its liabilities to interest rates and inflation.
To achieve operational efficiencies, and to reduce dependency on the existing manager of the derivatives portfolio, the client sought to move from a single manager to a multi-manager structure. Redington was engaged to advise on and project-manage the transition.
Redington managed the transition from the old to the new hedging structure, assisting the client in all aspects of the transition from single manager to multi-manager framework. These included both the design and the implementation of the new mandate.
The project was successfully completed within a six month timeframe, and has since formed the subject of a study published by the Institute of Actuaries: Unfunded Hedging Strategies: Some Practical Lessons for Asset Owners