Begin with the end in mind
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The document discusses managing investment portfolios and strategies for the endgame. It analyzes the stages of a flight plan - the opening, middle game, and end game - and how they relate to long-term investment goals and risk management. Charts and analyses show current and proposed allocations to asset classes like bonds, equities, and alternative investments for achieving endgame objectives.
Begin with the end in mind
- 1. Begin with the end in mind Private & Confidential Managing the Endgame September 2014 1
- 2. “In order to improve your game, you must study the endgame before everything else.” Jose Capablanca Private & Confidential Managing the Endgame September 2014 1
- 3. Government Bonds 22% Collateralised Derivative Assets Begin with the End in Mind Participation in Investment schemes 6% Property 1% Deposits 1% Receivables 2% CLOs 1% ABS 4% Illiquid Markets Liquid Credit LDI Corporate Bonds 24% 40% Private & Confidential Managing the Endgame September 2014 2
- 4. Begin with the End in Mind Private & Confidential Managing the Endgame September 2014 4
- 5. What are the 3 stages of a Flight Plan? The Opening The Middle Game The End Game Illiquid Credit Property 10% Gilts 20% Corporate Bonds 30% 10% Illiquid Credit Private & Confidential Managing the Endgame September 2014 6 GBP Millions Liabilities (Gilts Flat) Liabilities (TP Basis) Assets Time Gilts 10% Equities 50% Corporate Bonds 30% Equities 30% DGFs 10% Gilts 65% Corporate Bonds 25% 10%
- 6. The Opening “The purpose of the opening isn't just to get through it, it's to set the stage for the type of middle game you want. This can also mean manoeuvring for the type of game your opponent doesn't want” Garry Kasparov, How Life Imitates Chess Private & Confidential Managing the Endgame September 2014 7
- 7. The Opening RISK/RETURN RADAR Expected return Total risk Equity risk Diversification Hedge ratio Gilts 10% Equities 50% Corporate Bonds 30% Property 10% LDI Illiquid Markets Liquid Markets Liquid Credit Private & Confidential Managing the Endgame September 2014 8
- 8. The Middle Game “We must also play the middle game with an eye on the endgame.” Garry Kasparov, How Life Imitates Chess Private & Confidential Managing the Endgame September 2014 9
- 9. Gilts 20% Equities 30% Illiquid Credit 10% Illiquid Credit Liquid Markets Liquid Credit DGFs 10% Corporate Bonds 30% LDI Private & Confidential Managing the Endgame September 2014 10 The Middle Game RISK/RETURN RADAR Expected return Total risk Equity risk Diversification Hedge ratio
- 10. The End Game “The strategist starts with a goal in the distant future and works backwards to the present. A Grandmaster makes the best moves because they are based on what he wants the board to look like ten or twenty moves in the future... Then he works out the step-by-step moves to accomplish those aims” Garry Kasparov, How Life Imitates Chess Private & Confidential Managing the Endgame September 2014 11
- 11. The End Game RISK/RETURN RADAR Expected return Total risk Equity risk Diversification Hedge ratio Gilts 65% Corporate Bonds 25% Infrastructure Debt 10% LDI Illiquid Credit Liquid Credit Private & Confidential Managing the Endgame September 2014 12
- 12. The End Game Private & Confidential Managing the Endgame September 2014 12
- 13. 2-6 Austin Friars, London EC2N 2HD 13-15 Mallow Street London EC1Y 8RD Telephone : +44 (0) 20 7250 3331 www.redington.co.uk Please get in touch Private & Confidential Managing the Endgame September 2014 13 Disclaimer For professional investors only. Not suitable for private customers. The information herein was obtained from various sources. We do not guarantee every aspect of its accuracy. The information is for your private information and is for discussion purposes only. A variety of market factors and assumptions may affect this analysis, and this analysis does not reflect all possible loss scenarios. There is no certainty that the parameters and assumptions used in this analysis can be duplicated with actual trades. Any historical exchange rates, interest rates or other reference rates or prices which appear above are not necessarily indicative of future exchange rates, interest rates, or other reference rates or prices. Neither the information, recommendations or opinions expressed herein constitutes an offer to buy or sell any securities, futures, options, or investment products on your behalf. Unless otherwise stated, any pricing information in this message is indicative only, is subject to change and is not an offer to transact. Where relevant, the price quoted is exclusive of tax and delivery costs. Any reference to the terms of executed transactions should be treated as preliminary and subject to further due diligence . Please note, the accurate calculation of the liability profile used as the basis for implementing any capital markets transactions is the sole responsibility of the Trustees' actuarial advisors. Redington Ltd will estimate the liabilities if required but will not be held responsible for any loss or damage howsoever sustained as a result of inaccuracies in that estimation. Additionally, the client recognizes that Redington Ltd does not owe any party a duty of care in this respect. Redington Ltd are investment consultants regulated by the Financial Markets Authority. We do not advise on all implications of the transactions described herein. This information is for discussion purposes and prior to undertaking any trade, you should also discuss with your professional tax, accounting and / or other relevant advisers how such particular trade(s) affect you. All analysis (whether in respect of tax, accounting, law or of any other nature), should be treated as illustrative only and not relied upon as accurate. ©Redington Limited 2014. All rights reserved. No reproduction, copy, transmission or translation in whole or in part of this presentation may be made without permission. Application for permission should be made to Redington Limited at the address below. Redington Limited (6660006) is registered in England and Wales. Registered office: Austin Friars, 2-6 Austin Friars, London EC2N 2HD Redington Publications Robert Gardner Founder and Co-CEO Tel: 0207 250 3416 Email: robert.gardner@redington.co.uk Twitter: @robertjgardner
- 14. The Endgame: What are the Illiquid Credit Opportunities? ILS: Insurance linked securities CRE: Commercial Real Estate Debt Private & Confidential Managing the Endgame September 2014 14