LV= Pension Fund, Dorset, England, hired BlackRock to manage a liability-hedging strategy for the £1.2 billion pension fund ($1.8 billion), said Paul Cassidy, chairman of the trustees.
Mr. Cassidy did not disclose the size of the allocation.
The pension fund has about £1.5 billion in liabilities. It has used a “very passive LDI strategy” in place for a number of years, Mr. Cassidy said in an e-mail, and for the past year has been reviewing its investment and liability management strategies with the pension fund’s investment consultant Redington. Mr. Cassidy said they decided “it was time to adopt a more sophisticated and active LDI approach and hence appointed one of the market specialists in this field.”
BlackRock said in a news release that it had changed the mix of the pension fund’s liability-driven investments to include a wider range of swaps, gilts and repurchases, increasing protection against market risks, including changes to interest rates and inflation.
The firm has also introduced a volatility-controlled synthetic equity strategy for the pension fund, reducing exposure to equity market risk.