Liability Driven Investments..

[qhank]

Just a few facts:
A pension fund is usually either managed by (multiple) asset managers or if they are big enough they will have their own investment arm.
The asset manager is only allowed to invest in securities that are stipulated in the agreement with the client (this includes derivatives, hedging, margin etc...)
Securities are always held with a custodian.
And pension funds (at least in the west) have very strict reporting rules to the regulator.

Here is another fact:

Pension funds lost a lot of money thanks to subprime assets in 2008.

[TheBrit]

Here is another fact:

Pension funds lost a lot of money thanks to subprime assets in 2008.

Here's another fact - gilts are not subprime investments.

[sarsi]

The fund managers will do their best to manage the risk but it will never be 100%. TheBrit thinks this is box standard risk under LDI and no need to overworry about one off freak market movements. Apparently there are 10-20 other ppl who share his views and currently running your pension fund. I think different and seriously begging ppl not to let them do more of this with your money. The risk is not as remote as it sounds, it happened in 2008, every now and then for the random fund and it just happened last week.

Perfectly healthy and solvent funds have gone under in hours because they could not find liquidity quick enough to absorb market movements. When they firesale assets under margin call, these are sold in big amounts asap to then highest avail bidders. Traders and normal investors make their own guesses to try and profit from the market and when they see block sales like that, they might guess there is a margin call on a position. Gilts that are known to be held mostly by pension funds? Maybe it's a good time to short the pound because I think it'll drop soon. It is market risk they cannot manage no matter what they do.

[sarsi]

Old thread but it is the right one to post this drivel under..

https://geoexpat.com/forum/414/threa...ml#post3887007

The BlackRock article posted by shri 3+ mths ago that set off my alarm.. and went on to post that I think UK pension fund abt to implode and barely missed the avalanche this time. I was ok if ppl thot I was a complete crackpot bcos what I was saying then was at odds w what WSJ FT Reuters BBG all the papers, incl BOE and ur PF reg said. So long as it got them a lil concerned enuff to maybe send an email, remind their friends family in UK to think more abt it.

That's why to date I still can't figure out why TheBrit has a beef to pick at all or where the inexplicable juon is coming from when I actually don't have any. His posts show up to me like any others, my radar isn't scanning him on purpose waiting for a gd chance to get one in and stick it to him so he can look silly. The only time I think abt this is when he brings it up..

[sarsi]

Old thread but it is the right one to post this drivel under..

https://geoexpat.com/forum/414/threa...ml#post3887007

The BlackRock article posted by shri 3+ mths ago that set off my alarm.. and went on to post that I think UK pension fund abt to implode and barely missed the avalanche this time. I was ok if ppl thot I was a complete crackpot bcos what I was saying then was at odds w what WSJ FT Reuters BBG all the papers, incl BOE and ur PF reg said. So long as it got them a lil concerned enuff to maybe send an email, remind their friends family in UK to think more abt it.

That's why to date I still can't figure out why TheBrit has a beef to pick at all or where the inexplicable juon is coming from when I actually don't have any. His posts show up to me like any others, my radar isn't scanning him on purpose waiting for a gd chance to get one in and stick it to him so he can look silly. The only time I think abt this is when he brings it up..

https://geoexpat.com/forum/414/threa...ml#post3887134

There is another thread on this that contains links to several articles explaining LDI very well.

Sith is right, LDI is not a problem at all and makes perfect sense for defined benefit schemes.

The issues last week were due to gilt buyers going on strike and hence no market for anyone (pension funds, mutual funds, insurance companies, whoever) to sell their gilts in an orderly fashion. As is usual in these market dislocations, the central bank stepped in and became a buyer of last resort for a short period of time (up to two weeks).

Markets operating normally now, volatilty subsided and probably some operations departments reviewing their procedures on posting collateral.

Nothing to see here. Move along....

(the question on the UK Governments fiscal plans and the long term effect on gilt yields and sterling is another dicussion entirely....)

https://geoexpat.com/forum/414/threa...ml#post3889058

Nobody was arguing with you TheBrit. You weren't stuck doing anything or wasting hours of your life. You did all that by urself. The rest were either just trying to mull over it out of boredom or intellectual interest or me sounding the doomsday alarm like an idiot.

Please see the analysis from PWC I linked showing UK DB pension schemes are now hugely overfunded and in better shape than they’ve been in decades. Or you can believe they’re all on the edge of collapse based on a Geo rando….

Tribe logic over plain gd ol logic..

I consider this issue settled w Guardian article bcos whatever it says were points I also raised that TheBrit vehemently disagreed with and insisted I wrong cuz his explanation of what happened (ie the exact opposite of article) was the truth - being the core and backbone of his claims. I said a lot more than what article covered but even if I am wrong abt those, it wouldn't make a diff for TheBrit. Cuz he wld still be wrong - completely out the game. I should have done this earlier as the perm marker for setting the record straight re state of PF but was willing to let sleeping dogs lie since it was nvr abt me proving I'm right...tho I doubt this will really change anything or stop future attempts to make some ref to this pension scheme and how he wasted hours of his life trying to explain it - classic misinfo tactic and what wumao freq use. Use words to imply a wrong frame. Cuz waste time explaining implies I didn't know and asked him for guidance and he was v willing and kindhearted to oblige but alas, too dumb to understand the truth and right answer.

You facepalmed ByeByeEngland conclusions and said maybe should write into the PF regulator then. Why? You think everyone is actually doing this mostly to talk a gd game and look smart but ultimately of no merit cuz wouldn't dare repeat outside of internet? To be clear, I was begging others to send just one email to any addy so naturally I wld have done the same. I wrote in to Bank of England, HM Treasury and PF. I also sent my analysis to the fund (the one w theviewpt qhank's article) after and told them this info is w ppl who unlike me an indiv have the means to actually build a CDS position.

https://www.theguardian.com/business...-ldi-investing

[hullexile]

Old thread but it is the right one to post this drivel under..

https://geoexpat.com/forum/414/threa...ml#post3887007

The BlackRock article posted by shri 3+ mths ago that set off my alarm.. and went on to post that I think UK pension fund abt to implode and barely missed the avalanche this time. I was ok if ppl thot I was a complete crackpot bcos what I was saying then was at odds w what WSJ FT Reuters BBG all the papers, incl BOE and ur PF reg said. So long as it got them a lil concerned enuff to maybe send an email, remind their friends family in UK to think more abt it.

That's why to date I still can't figure out why TheBrit has a beef to pick at all or where the inexplicable juon is coming from when I actually don't have any. His posts show up to me like any others, my radar isn't scanning him on purpose waiting for a gd chance to get one in and stick it to him so he can look silly. The only time I think abt this is when he brings it up..

https://geoexpat.com/forum/414/threa...ml#post3887134



https://geoexpat.com/forum/414/threa...ml#post3889058

Nobody was arguing with you TheBrit. You weren't stuck doing anything or wasting hours of your life. You did all that by urself. The rest were either just trying to mull over it out of boredom or intellectual interest or me sounding the doomsday alarm like an idiot.



Tribe logic over plain gd ol logic..

I consider this issue settled w Guardian article bcos whatever it says were points I also raised that TheBrit vehemently disagreed with and insisted I wrong cuz his explanation of what happened (ie the exact opposite of article) was the truth - being the core and backbone of his claims. I said a lot more than what article covered but even if I am wrong abt those, it wouldn't make a diff for TheBrit. Cuz he wld still be wrong - completely out the game. I should have done this earlier as the perm marker for setting the record straight re state of PF but was willing to let sleeping dogs lie since it was nvr abt me proving I'm right...tho I doubt this will really change anything or stop future attempts to make some ref to this pension scheme and how he wasted hours of his life trying to explain it - classic misinfo tactic and what wumao freq use. Use words to imply a wrong frame. Cuz waste time explaining implies I didn't know and asked him for guidance and he was v willing and kindhearted to oblige but alas, too dumb to understand the truth and right answer.

You facepalmed ByeByeEngland conclusions and said maybe should write into the PF regulator then. Why? You think everyone is actually doing this mostly to talk a gd game and look smart but ultimately of no merit cuz wouldn't dare repeat outside of internet? To be clear, I was begging others to send just one email to any addy so naturally I wld have done the same. I wrote in to Bank of England, HM Treasury and PF. I also sent my analysis to the fund (the one w theviewpt qhank's article) after and told them this info is w ppl who unlike me an indiv have the means to actually build a CDS position.

https://www.theguardian.com/business...-ldi-investing

You really need to learn to write more concisely and make your point clear.

[sarsi]

Wip clearly something I would like to get better at but anyone interested to read shouldn't have any problems understanding or asking for clarifications.. for ppl not interested, I don't think better writing helps.

[sarsi]

For the TLDR:

Everything TheBrit said on this topic = wrong

LDI-related hedging cause of the gilts crisis = Yes

Gilts crisis just paper loss = No

UK PF overfunded w surplus = even it was, maybe not anymore if they lost maybe 500bn pounds from that margin call per article

[hullexile]

For the TLDR:

Everything TheBrit said on this topic = wrong

LDI-related hedging cause of the gilts crisis = Yes

Gilts crisis just paper loss = No

UK PF overfunded w surplus = even it was, maybe not anymore if they lost maybe 500bn pounds from that margin call per article

So that was months ago, what is the position of the pension funds now? Any gone bust or in crisis?

[sarsi]

We weren't discussing when it will go bust.

Discussion was abt whether there were actually real losses suffered by PF and if they sold off fund assets to meet margin call. I said yes, TheBrit said no.