Aegon Asset Management is launching an asset management service that provides pension schemes with a bespoke overlay that uses derivatives and other financial instruments to actively mitigate against downside risk, while optimising upside opportunities.
The Asset Allocation Service is run by AAM’s Multi Asset Group which is managed by its European head of multi asset investing Scott Jamieson.
The fund manager says most schemes usually have a mix of investments designed to meet its strategic objective based on 10 to 20-year time horizons, during which time the asset allocation remains largely unaltered, leaving them vulnerable to market volatility.
Jamieson says: “Most investors construct portfolios with a spread of assets in the hope that it will mitigate for market turbulence in a particular asset class. Unfortunately the recent credit crunch has clearly demonstrated a situation where asset classes converge and the benefit of diversification is lost. We believe that similar situations will arise in the future. Through hedging our service explicitly seeks to protect the scheme from these severe market conditions by offering a payback commensurate with the extent of any market setback.”