Investment Proposal for UK Defined Benefit Pension Fund

5QQMN532 Asset Maintenance Management

Task:

A proposal to manage investments on behalf of a pension fund You work for an asset management company and are required to prepare a proposal (maximum 2000 words) to win a new client which is a UK defined benefit pension fund with £800 million of assets in their fund (and the pension liabilities are £780 million).

Your proposal is to win the mandate to be appointed as investment manager for one of the following:

A. For £40 million of the assets in the pension fund to be invested in your firm’s passive index-tracking U.K. equity fund with an ESG focus.

B. For £40 million of the assets in the pension fund to be invested in Asian fixed income investments, to be actively managed as a segregated portfolio.

C. A Liability Driven Investment strategy to manage £700 million of the assets in the pension fund, which will be managed as a segregated portfolio (the remaining £100 million will be allocated to a different manager who will follow a growth strategy).
Your proposal should include

1. Describe your investment management company (25 marks)

• Firm and people

• Historic investment performance record for clients

• Client base

• Philosophy

• Fees

• Service provided

2. Investment process (50 marks)

• Portfolio/fund objective?

• Research?

• Are models used?

• Who makes decisions?

• Risk controls?

• Portfolio turnover?

• What is your firm’s competitive advantage?

3. Why the client should invest in the markets and with the strategy you have chosen (25 marks) It depends on which strategy you have selected which issues are relevant, but these might include.

• How you would invest the funds

• Active versus passive

• Segregated portfolio versus investing in collective fund

• Fixed income versus equity

• Traditional versus liability-driven investment

If you wish you can look at fund managers’ websites for background information but you are preparing this for a fictitious investment management company and please do not copy or plagiarise materials from these websites, and reference any source materials.

Get instant help from 5000+ experts for