The Pension Protection Fund (PPF) in the UK aims to appoint a panel of specialist bond managers as it seeks to broaden its fixed income investing strategy.
The PPF has previously concentrated mainly on the global sovereign market but is now seeking expertise in absolute return strategies, asset-backed securities and emerging market debt. The fund has a portfolio £9 billion (€11 billion), up to 70% of which is allocated to cash and bond strategies.
The PPF was set up after the Pensions Act 2004 to pay compensation to members of defined benefit or hybrid pension schemes in the event that the sponsor becomes insolvent. The fund says the panel of specialist bond managers will give it flexibility to respond to opportunities and generate attractive returns. The fund generally pursues a low-risk strategy and targets returns above Libor.
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