TPT Investment Management (TPTIM) has launched a new liability driven investment (LDI) solution for UK defined benefit (DB) pension schemes, in conjunction with Insight Investment.

The new solution, which will be available to DB schemes through the group's fiduciary management service, is designed to enable schemes to implement "robust" long-term funding strategies focused on their endgame objectives.

The tool offers an integrated approach to help pension schemes manage liability risk, return requirements and liquidity needs, and is designed to be flexible to the specific needs of individual schemes while also offering better value due to the benefits of scale from consolidation.

It is built around the liability hedging contribution from non-LDI assets such as corporate bonds and secure income investments, and is supported by the liquid asset portfolio, which is fully integrated into the collateral management framework.

As the fiduciary manager with control over the whole portfolio, TPTIM said that it is also able to "efficiently rebalance" between liquid assets and LDI when required.

In line with this, TPTIM will use a total portfolio approach to LDI that achieves a close curve match, utilising funds designed around client liability profiles.

It will also aim to maximise capital efficiency to meet required returns through a collateral framework designed around a holistic view of portfolio liquidity.

In addition to this, the tool is designed to provide TPTIM with the flexibility to set recapitalisation and re-leverage points of the funds, so capital isn’t tied up in LDI funds unnecessarily.

Commenting on the launch, TPTIM head of investment, Peter Smith, said: “We’re excited to launch our new best-in-class LDI solution with Insight Investment, which brought an innovative and collaborative spirit to the development of this new solution for DB schemes.

"Our new LDI solution is bespoke and can be tailored to the needs and risk profiles of individual schemes to manage their specific liability characteristics, return requirements and liquidity needs.

"Risk management is enhanced through industry-leading data and reporting. The experience of our investment team and alignment of interests with our ownership will allow us to continue to pass the benefits of our scale onto other trustees and schemes.”

Insight Investment head of the client solutions group, Serkan Bektas, added: “We are very pleased to be working with TPTIM on this critical component of its fiduciary management service.

"The teams at Insight and TPTIM have built a strong partnership, working together on a rigorous design process which has resulted in the creation of bespoke hedges for TPTIM’s individual schemes.

"The Insight team took care to ensure the overall solution is focused on delivering the outcomes that scheme members need, with attention paid to efficient management of costs and the implementation of a straightforward framework for monitoring and execution.”

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