Credit Suisse Launches Two Innovative LDI Funds for UK Pension Schemes

Credit Suisse is pleased to announce the launch of two innovative funds aimed at generating a real improvement in the funding position of UK Defined Benefit Occupational Pension Schemes whilst offering some protection of the future liability. The Credit Suisse Diversified Growth (UK) LDI Fund and Credit Suisse Target Return (UK) LDI Fund will incorporate growth assets with a swaps portfolio aiming to provide inflation or interest rate protection while generating alpha over and above the cost of funding the swap.

Paul Bourdon, Managing Director and Head of the European Pensions Solutions Group in Credit Suisse’s Asset Management business commented: “The key driver behind the product is the recent trend towards liability driven investment for Occupational Pension Schemes. These two Funds utilise Credit Suisse’s investment management and pension solution expertise to provide broad access to solutions which seek to mitigate the key risks impacting schemes, namely interest rate risk, inflation rate risk and investment risk. These Funds are designed to offer small and medium schemes the opportunity to participate in alpha generating solutions within a risk aware environment - maximising the efficiency with which assets are invested”.

Each Fund will contain four share classes, two of which will offer inflation protection and two of which offer interest protection to fixed dates. The ’growth asset’ within the Diversified Growth (UK) LDI Fund is the existing CS Nova Diversified Growth Fund. This is a multi-asset class fund seeking a return of Libor + 400bps net of fees. This Fund is proposed for use with liabilities deemed to be in excess of twenty years in the future.

Alternatively, the ’growth asset’ with the Target Return (UK) LDI Fund is the existing Credit Suisse Target Return Fund. This is a diversified fixed interest fund seeking a return of Libor + 250bps gross of fees. This Fund is proposed for use with liabilities that are deemed to be less than twenty years in the future. Each Fund will be a Lux SICAV under the SIF regime and will be denominated in GBP.

Bourdon added: “Both Funds form the building blocks that will allow Credit Suisse to offer effective solutions to many schemes, while for those with particular requirements outside the scope of these two specific Funds, the skills and experience developed in operating this model can be applied on a bespoke basis to deliver the best solutions for individual clients.”