The Best Research Papers on Cashflow Management and Cashflow-Driven Investing for Pensions Schemes
Cashflow management is not a topic that is frequently covered in investment literature. But as DB pension funds mature and become cashflow negative, this is a topic that is becoming increasingly important.
How can a DB pensions scheme become more cashflow aware? How can schemes better manage their cashflows and protect themselves against unexpected difficulties? We've selected below some of the best papers to tackle these questions, and to examine the case for so-called "cash-driven investment".
DB Pension Schemes: Raising cashflow awareness (LGIM, 2017)
(For compliance reasons, this paper is only accessible in the USA and Canada)
Around the world, DB pension schemes are maturing. Over half of DB schemes are either already cashflow negative, or soon will be. This paper by LGIM explains what schemes can do to better manage their cashflows.
A Guide to Cashflow Risk Management - helping UK DB schemes on their Road to Resilience (Hymans Robertson, 2016)
As DB schemes become increasingly mature, and the amount being paid out in pensions and other benefits steadily increases, it’s becoming ever more important that schemes turn their attention to cashflow management. Here's a guide.
Pensions: Why being cashflow negative is irrelevant to risk (KPMG, 2017)
KPMG argues that cashflow negative which has become a misguided focal point. Instead, this seven-page paper explores the factors that they believe pensions schemes should be focused on.
Cashflow driven investment or clever distribution investing (Schroders, 2017)
Over the past few years, cashflow driven investment (CDI) has been increasingly gaining the attention of UK DB pension funds as a risk-managed investment solution to meet their payment needs. This paper explores CDI in more detail.
The Case for Cash-Flow Driven Investment (Janus Henderson Investors, 2017)
In a low yield environment, the strategic use of assets to address negative cash-flows within DB pension schemes becomes more important. This paper explains what cash-flow driven investing is and why schemes should be considering it.
Cash-flow generating real assets - the next big thing for pension schemes? (Willis Towers Watson, 2017)
Income provided by traditional assets is inadequate. Here, Duncan Hale of Willis Towers Watson makes the case for pension fund investment in real assets to improve the health of cash flows.