Investment Grade Credit-Based Solutions (UK)

Summary

Notwithstanding the adverse economic impact of COVID-19, Aon believes now is an attractive point to incorporate global investment grade credit into your liability driven investment strategy to harvest the elevated illiquidity element available within current credit spreads, particularly in longer dated credits.

Selling some gilts from within the liability hedging portfolio, whilst retaining overall hedging levels, and selling growth asset diversifiers or absolute return bond funds that have retained their value over 2020, can finance the credit investment.

Perhaps 0.5% p.a. could be added to expected returns and investment risks, like trustees’ cashflow risk and sponsors’ future accounting position volatility, reduced. A credit allocation also helps reduce volatility relative to insurer pricing for trustees with a long term target of buy-out or phased buy-ins along the way.

Aon’s existing client investment solutions enable trustees who wish to invest immediately to capture current spreads to do so.

Download the full whitepaper above to learn more. 


About Aon

Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

© 2020 Aon Hewitt Limited. All rights reserved.
This document and any enclosures or attachments are prepared on the understanding that it is solely for the benefit of the addressee(s). Unless we provide express prior written consent, no part of this document should be reproduced, distributed or communicated to anyone else and, in providing this document, we do not accept or assume any responsibility for any other purpose or to anyone other than the addressee(s) of this document.

Notwithstanding the level of skill and care used in conducting due diligence into any organisation that is the subject of a rating in this document, it is not always possible to detect the negligence, fraud, or other misconduct of the organisation being assessed or any weaknesses in that organisation’s systems and controls or operations.

This document and any due diligence conducted is based upon information available to us at the date of this document and takes no account of subsequent developments. In preparing this document we may have relied upon data supplied to us by third parties (including those that are the subject of due diligence) and therefore no warranty or guarantee of accuracy or completeness is provided. We cannot be held accountable for any error, omission or misrepresentation of any data provided to us by third parties (including those that are the subject of due diligence). This document is not intended by us to form a basis of any decision by any third party to do or omit to do anything.

Any opinions or assumptions in this document have been derived by us through a blend of economic theory, historical analysis and/or other sources. Any opinion or assumption may contain elements of subjective judgement and are not intended to imply, nor should be interpreted as conveying, any form of guarantee or assurance by us of any future performance. Views are derived from our research process and it should be noted in particular that we cannot research legal, regulatory, administrative or accounting procedures and accordingly make no warranty and accept no responsibility for consequences arising from relying on this document in this regard.

Calculations may be derived from our proprietary models in use at that time. Models may be based on historical analysis of data and other methodologies and we may have incorporated their subjective judgement to complement such data as is available. It should be noted that models may change over time and they should not be relied upon to capture future uncertainty or events.

Aon Hewitt Limited
Aon Hewitt Limited is authorised and regulated by the Financial
Conduct Authority.
Registered in England & Wales No. 4396810
Registered office: The Aon Centre | The Leadenhall Building | 122
Leadenhall Street | London | EC3V 4AN

To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the prior written consent of Aon Hewitt Limited. Aon Hewitt Limited does not accept or assume any responsibility for any consequences arising from any person, other than the intended recipient, using or relying on this material.

Previous Flipbook
Investment Weekly Market Update 2020 (US)
Investment Weekly Market Update 2020 (US)

What happened in markets this week during COVID-19 volatility

Next Flipbook
An Emerging Equity Opportunity: China A-Shares (UK)
An Emerging Equity Opportunity: China A-Shares (UK)

Investors with a healthy risk appetite and a long-term investment horizon should consider a stand-alone all...

×

How May We Help? Reach out to an Aon consultant now.

First Name
Last Name
Company
Job Title
Phone Number
Industry
Country
Comments
Aon group companies will use your personal information to contact you from time to time about other products, services and events that we feel may be of interest to you.  All personal information is collected and used in accordance with our privacy statement.

Please click here to manage your communication preferences
Someone will be in contact shortly!
Error - something went wrong!