The need for liability management with reduced volatility has seen the University of London invest in a risk parity strategy with First Quadrant.
The Superannuation Arrangements of the University of London (SAUL), which provides pensions for non-academic staff, has allocated £80 million (€92 million) of its defined benefit pension scheme to First Quadrant’s Global Risk-Balanced Fund.
The fund aims to improve risk-adjusted returns by diversifying risk more equally across various assets, including global and emerging market equities, sovereign bonds and real estate.
Penny Green, chief executive at SAUL, says: “In today’s low yield environment, managing liabilities while still reducing volatility has become a primary objective for SAUL.”
Karen Heaven, vice president in investment consulting at Redington, which advised the scheme on the appointment, says: “We believe that risk parity strategies offer attractive risk-adjusted returns, and this new appointment is consistent with the pension risk management framework that SAUL has in place to ensure that investment strategy is in line with the scheme’s overall objectives.”
The win is the second UK mandate for the fund following Associated British Foods in November 2012.
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