The Changing Role of Fixed Income Investing

Online in Zoom

Thursday 11th May 2023

13:40 – 16:10 BST

Sponsored by

JP Morgan Asset Management
The Secular Change in the Rates Environment

The sea change in the fixed income markets cannot be overstated. The last two generations of global investors have only ever known a world of continuously declining rates and yields, culminating in almost a decade of rock bottom rates driven by QE and other forms of financial repression. The traditional role of fixed income in investment portfolios, especially as both a safety anchor and for the provision of a positive risk-free rate as a building block for portfolio construction across all asset classes, has at best been in abeyance and in many cases never learned. 

The direction of rates and yields is now in reverse on a secular basis, and this has momentous implications for the management of pension assets. It will profoundly impact the performance prospects for all the major fixed income sectors – government bonds, investment grade credit, high yield, EMD, private credit – not to mention all over asset classes as relative values shift and hurdle rates rise. It will also increase the attraction of annuities and buyout deals in the DC and DB retirement spaces respectively.

At the Masterclass, the positive consequences of these shifts for pensions investments will be explored in detail by practitioners with decades of experience in the fixed income and wider asset markets. Expect a candid and highly interactive debate, with delegates encouraged to engage proactively throughout. 

Chair

Harvey D. Shapiro

Experienced Financial Writer

Agenda
Devil's Advocates

Sally Bridgeland, Chair – Investment Board, Local Pensions Partnership
Mark Hedges, Trustee Director, Nationwide Pension Fund
Ian McKinlay, Senior Adviser, Avida International

A panel of Devil’s Advocates will be on duty for the course of the afternoon.
They will be available to pose challenging questions to any of the conference speakers when invited to do so by the Moderator of each session. They will provide an end of day summary of the main learning and action points from the conference.

13.20 – 13.40
Meet & Greet
13.40 – 14.00
Welcome & Introduction

Masterclass Chair:
Harvey Shapiro
Experienced Financial Writer

Programme Director:
Stephen Glover
Director
SG Pensions Enterprise

The 40-year bull market in bonds is over. Our Chair will discuss the backdrop to this extraordinary and unprecedented decline in the cost of money over such a sustained period and some, as well as the dynamics which have now created a new environment of sustained higher rates, together with their consequences for financial market participants

14.00 – 15.00
Panel Discussion:
Implications for Asset Allocation Across Pensions

Moderator:
Harvey Shapiro
Experienced Financial Writer

David Adkins
Chief Investment Officer
Lloyds Banking Group Pensions

Chris Hitchen
Chair – Investment Committee
NEST

Gordon Ross
Chief Investment Officer
LGPS Central

Paul O’Brien
Member of the Investment Committee
Wyoming Retirement System

The asset allocation decision accounts for the overwhelming proportion of total return in a diversified investment portfolio over time. As a consequence, the secular rise in real rates will have profound consequences for investment choices across all types of pension scheme.

Senior investment officers at a private DB, DC, LGPS and an overseas pension plan, together with a leading investment manager, will discuss the far-reaching implications, the practical changes they are making to their asset allocation strategies, and the expected performance and risk-reduction benefits they expect to achieve. 

15.00 – 15.25
Presentation: The Value of Fixed Income in the Closed DB Context

Gareth Haslip
Global Head of Strategy & Analytics
J.P. Morgan Asset Management

On the liability side, higher gilt rates have resulted in significantly improved funding positions across the board for private DB schemes. On the asset side, meeting funding positions across the board for private DB schemes. On the asset side, meeting funding targets may now be accomplished with less risk, whether the scheme is targeting buyout or intends to remain internally managed. 

Our speaker will discuss the fixed income strategies, including Buy & Maintain mandates, designed to achieve optimum performance, income and cash flow outcomes for DB funds in the current environment. 

15.25 – 15.55
The Future Outlook & Devil's Advocates' Summary

David Tan
Chair – Investment Committee
J.P. Morgan Retirement Plan

Sally Bridgeland
Chair – Investment Board
Local Pensions Partnership

Mark Hedges
Trustee Director
Nationwide Pension Fund

Ian McKinlay
Senior Adviser
Avida International

David Tan, of the J.P. Morgan Retirement Plan, will reflect on his decades of experience in the fixed income markets on the future direction of rates and how pension funds should be positioning themselves. 

The Devil’s Advocates will discuss with delegates the manifold implications for a number of pensions investment strategies of the secular rise in rates, as well as present their main conclusions and takeaways from the Masterclass. 

16.00 – 16.15
Final Thoughts & Closing Remarks
Speakers

David Adkins

Chief Investment Officer

Lloyds Banking Group Pensions

Sally Bridgeland, Chair Brunel Pension Partnership

Sally Bridgeland

Chair - Investment Board

Local Pensions Partnership

Gareth Haslip

Global Head of Strategy & Analytics
J.P. Morgan Asset Management

Mark Hedges

Trustee Director

Nationwide Pension Fund

Chris Hitchen, Chairman, Border to Coast Partnership

Chris Hitchen

Chair – Investment Committee
NEST Corporation

Ian McKinlay, Senior Adviser, Avida International

Ian McKinlay

Senior Adviser

Avida International

Paul O'Brien

Member – Investment Committee
Wyoming Retirement System

Gordon Ross

Chief Investment Officer

LGPS Central

David Tan

Chair – Investment Committee
J.P. Morgan Retirement Plan

Sponsors
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Harvey D. Shapiro

Experienced Financial Writer

Harvey D. Shapiro is a writer and consultant based in New York City. He was a Senior Contributing Writer at Institutional Investor Magazine for many years, and has also been a financial columnist for The New York Times. 

He has written for New York Magazine, The Economist Intelligence Unit, and a number of leading magazines and newspapers. In addition to his writing, Shapiro has been active in organising and moderating financial conferences all over the world. 

Mr. Shapiro has been a speechwriter for several US political candidates and corporate CEOs. He has also been a consultant to the President’s Commission on Income Maintenance Programs, the Cabinet Committee on Cable Communications, and the US Small Business Administration. He has also been a consultant to JP Morgan Chase, the Baupost Group, the NASDAQ Stock Market, and MLB (Major League Baseball). He has also been a member of the Council on Foreign Relations’ Taskforce on Country Risk.

Mr. Shapiro holds degrees from the University of Wisconsin, Princeton University and the University of Chicago. He was a Walter Bagehot Fellow at Columbia University, where he also served as an Adjunct Professor. He is listed in Who’s Who in Finance, and Who’s Who in America. 

David Adkins

Chief Investment Officer
Lloyds Banking Group Pensions

David has spent his 30+ year career working in pensions and investment. The early years were spent in consulting, during which he qualified as an actuary before joining what is now Willis Towers Watson’s investment practice to advise UK and European clients on investment strategy. He then spent six years as Chief Investment Officer for the Pensions Trust, before joining Lloyds Banking Group (Pensions Investment Team) as Head of Investment Strategy. 

In that role, David was responsible for all aspects of investment strategy including asset allocation, de-risking ‘triggers’, longevity hedging, rebalancing policy and responsible investment policy. He became Chief Investment Officer in February 2022. 

Gareth Haslip

Global Head of
Strategy & Analytics
J.P. Morgan Asset Management

An employee since 2013, Gareth is responsible for delivering customised investment solutions to (re)insurers to achieve their objectives within the risk, regulatory, capital, and accounting environment of their business. 

Prior to joining J.P. Morgan Asset Management, he held senior positions at Aon: as both a director of Aon Enfield Securities, and co-head of Aon Hewitt’s Insurance Asset Solutions, a global cross-practice team providing investment advice to insurers. Before these roles at Aon, he was an executive director at Goldman Sachs Asset Management, specialising in asset management for the insurance industry. 

Gareth has extensive experience in the insurance and investment industry, and his areas of expertise include stochastic modelling of insurance and asset risk, optimal investment strategies, as well as regulatory and rating agency capital. 

Gareth is a qualified investment actuary with 17 years of industry experience, and holds a PhD in Actuarial Science from Cass Business School on the topic of derivative pricing. 

Mark Hedges, Trustee Director, Nationwide Pension Fund

Mark Hedges

Trustee Director
Nationwide Pension Fund

Mark is a Trustee and former Chief Investment Officer of the Nationwide Pension Fund, where he had responsibility for the performance and implementation of the asset allocation strategies agreed with the fund investment advisors.

Previously, he led the establishment of Nationwide’s Covered Bond programme and its Silverstone RMBS Master Trust funding vehicle. In addition, Mark has securitised UK Student Loans and a synthetic corporate bond structure along with structured transaction and investment in various ABS instruments. Past experience also includes leading the origination and structuring of social housing, PFI and commercial real estate debt transactions.

Chris Hitchen, Chairman, Border to Coast Partnership

Chris Hitchen

Chair – Investment Committee
Nest Corporation

Chris was one of the inaugural Trustees at Nest, a 9 million member DC scheme, and returned to its Board in 2018, where he chairs the Investment Committee. Chris is also Chair of the Border to Coast Pensions Partnership, a pooling vehicle set up by twelve LGPS pension funds with assets of over £40 billion. In addition, he is corporate Chair at the Pension SuperFund, an initiative to consolidate private sector DB pension schemes.

Chris is a Board member for the Toronto-based International Centre for Pensions Management, and for the UK’s Investor Forum, a conduit for strategic dialogue between companies and investors, and an outcome of the Kay Review, on which Chris served.

Chris is an Actuary, a Past Chair of the Pensions and Lifetime Savings Association and an Honorary Fellow of the CFA Society of the UK. He and his wife Pip have four mostly grown-up sons and in his spare time, Chris runs marathons slowly.

Ian McKinlay, Senior Adviser, Avida International

Ian McKinlay

Expert Pensions CIO

Ian is a highly experienced pensions investment executive. Most recently, he has been the Chief Investment Officer at Lloyds Banking Group Pensions, overseeing some £40 billion of assets across both DB and DC sections. He joined Lloyds from Aviva, where he carried out a similar role. Prior to that, he was the CIO of the Pension Protection Fund. Ian is also a member of the actuarial profession’s Finance and Investment Board, while also being Chairman of EPFIF’s Pension Fund Investment Advisory Committee.

Paul O'Brien

Member – Investment Committee
Wyoming Retirement System

Paul is a Trustee and Board Member of the Wyoming Retirement System. From 2009 to 2018, he was Head of Fixed Income Strategy and Deputy Chief Investment Officer at the Abu Dhabi Investment Authority. Managing a multi-national team of over 20 investment professionals, he helped lead both strategic and tactical asset allocation, benchmark selection, portfolio construction, and research, as well as advising ADIA’s Investment Committee. 

Previously, Paul was a global fixed income portfolio manager at Morgan Stanley Investment Management in the UK and the US. He worked with institutional investors around the world, with a focus on interest rates and currencies. Prior to that, he worked as an economist for Morgan Guaranty Trust Company in Paris, and in London as Head of the European Economics Team.

Paul started his career as an Economist, and then Section Chief at the Board of Governors of the Federal Reserve System in Washington, DC. He worked in the Division of Monetary Affairs and regularly briefed the Board on monetary policy issues and developments in financial markets. While at the Federal Reserve he was seconded to the Bank for International Settlements in Basel, Switzerland, and the Organization for Economic Cooperation and Development in Paris.

Paul has a PhD in Economics from the University of Minnesota.  He attended the US Naval Academy and received his undergraduate degree from MIT.

David Tan

Chair – Investment Committee
J.P. Morgan Retirement Plan

David Tan has worked in financial markets for more than 35 years and is currently Trustee Director and Chair of the Investment Committee of the JP Morgan Retirement Plan which oversees the Plan’s Defined Benefit investments. David is also a member of the Defined Contribution Committee.

David previously worked for many years in fixed income portfolio management at JP Morgan Asset Management as Head of Global Rates and Head Portfolio Manager, managing investments on behalf of global Central Banks, Sovereign Wealth Funds and multilateral organisations.

He has also worked at HM Treasury as an Economic Adviser on Debt and Reserves Management.

David graduated from Cambridge University with an MA degree and from the London School of Economics with an MSc degree, both in Economics.

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CONTACT

David Hutchins
Portfolio Manager – Multi Asset Solutions

Michelle Inskip
Managing Director – Institutional Client Group

For more details, visit J.P. Morgan’s website here.

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