Record levels of inflation hedging

nest golden egg 410Inflation hedging by UK pension schemes reached a record high in the second quarter as they looked to control liabilities.

£18.5 billion (€23.3 billion) of inflation hedging transactions were carried out, nearly three times as much as the same period in 2011, according to fund manager F&C’s Liability Driven Investment survey of investment bank trading desks.

Scheme took advantage of the relative cheapness of inflation-linked gilts and RPI swaps.

When asked for their opinions on the likely direction of key rates, respondents overall expected a fall in interest rates and a rise in inflation expectations. 

©2012 funds europe