JPMorgan Asset Management has introduced a new product, D&A - JPM Duration & Alpha Funds, that it claims can help pension funds reduce duration risk while offering capital growth.
The new range of products are aimed at pension schemes interested in a ‘one-stop’ liability driven investment (LDI) solution. According to JPMorgan Asset Management (JPMAM), the funds offer a way to reduce pension schemes’ funding risk while simultaneously offering potential for excess returns relative to their liabilities.
The funds can help cash-strapped pension funds thanks to four open pooled structures, of different duration and inflation profiles, which will allow pension schemes to replicate part or all of their liabilities.
The funds have an objective of generating a return of 2% in excess of their respective long duration benchmark.
JPM D&A is a pragmatic alternative for pension funds that see the rationale for risk reduction but do not want to loose potential excess return by buying low yielding bonds, commented Simon Chinnery, senior client adviser at JPMAM. Our straightforward approach should make this an attractive proposition for pension schemes wanting a one-stop shop to both reduce funding risk and enhance returns.