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Case Studies
Realigning investment strategy
The problem -
Investment strategy is one of the most important responsibilities of a pension scheme trustee board. Despite having an independent investment advisor, trustee boards can easily get stuck in a rut with their investment strategy.
What we found -
When Woodley Trustees was appointed to chair one board, it became clear that despite the long term deterioration in the sponsor’s covenant, the trustees had not taken time to fundamentally review their investment strategy for many years. As a result, the level of risk involved was very high in relation to the covenant of the sponsor. The trustees were not taking advantage of the many tools now available to manage risk and optimise returns, and their investment costs were high.
The solution -
We worked with the trustees and the sponsor to help everyone understand the level of risk being taken and the high costs involved. The trustees then worked with the Investment Manager and Actuary to develop a new investment strategy. This included the use of a more diversified set of return-seeking investments and new Liability Driven Investments with appropriate triggers to increase hedging. The employer was consulted throughout the process and was fully behind the changes implemented.
The result -
The level of risk was significantly reduced and costs were lowered. The new strategy proved highly successful with assets increasing by over 20% in the following 18 months.
