Author: Evie Davies

There’s no doubt that managing the spike in Liability Driven Investment (LDI) collateral calls last September was a challenge for all of us – whether trustees, asset managers, consultants, or platforms.  Like many in the industry, we’ve been talking to interested parties to understand how we can improve our proposition to meet the requirements of the LDI market for 2023 and beyond.

One initiative we’ve introduced at Mobius is automated collateral waterfalls, where our clients nominate in advance which funds will be used to meet future calls and in which order.

This means we can automatically use the agreed fund to meet calls without the delay of awaiting instructions – and if the agreed fund can’t meet the call, we have instructions about which subsequent funds to sell.

Automated collateral waterfalls will provide added comfort that calls can be met on time and in full and will reduce the need for advisors and trustees to be involved in the process.

The events of last September, re-emphasised the benefits to our clients of being on the Mobius platform.  Yes, we experienced long working days with soaring trading volumes, but we were able to respond to our clients’ needs.

At the same time as managing collateral calls, we efficiently managed all other aspects of our clients’ investment administration, including transitioning assets, switching funds, rebalancing portfolios, monitoring trigger points and manufacturing bespoke funds – all the while taking execution risk away for schemes of all sizes.

If the volatility in rates and LDI markets re-emerges in 2023 or beyond, we’re likely to see further spikes in collateral activity.  Navigating these changes can be a challenge for trustees and consultants – but those with assets held on the Mobius platform can be confident we will continue to administer changes in asset allocation and collateral management on their behalf.

Whatever LDI strategy schemes choose to follow, the timely and accurate reallocation of scheme assets is essential; whether it is selling liquid assets to meet collateral calls or unwinding existing LDI investments.  This is where the benefits of the Mobius platform really kick in; consultants can focus on advising their clients on the right strategy, rather than worrying about investment administration and the execution risk involved.

For schemes managed on the platform, consultants or trustees simply need to send us the instruction to execute their required changes. Our in-house specialist implementation team will do the rest, seamlessly, safely, and timely.

Helping our clients manage LDI strategies and facilitating waterfall collateral management are further benefits of the Mobius platform and set us apart from other institutional pension platforms.

If you would like one of our team to contact you, please click here.

Over 90% of pension schemes are expected to have a professional independent trustee within the next five years according to Isio’s authoritative Professional Independent Trustee Survey. The consultant estimates 6 out of 10 schemes already use independent trustees – a trend we have seen at Mobius, with an increasing number of our clients opting to use professionals today.

The rise in professional trustee appointments is changing the dynamic of how schemes are advised and how they use that advice. Where once the investment consultant was the primary source of advice and strategic counsel for schemes, particularly smaller ones, now many can look to their professional trustee for guidance instead. Trustees have always been ultimately responsible for the governance of their schemes and this remains the case.

This shift is good for both schemes and consultants. Schemes will be able to undertake more decision-making activities themselves. At the same time the consultants will be able to focus on strategic advice where they can really add-value, rather than being bogged down in more routine trustee decisions.

Of course, professional trustees offer deep expertise in scheme governance, setting strategy, member administration, record keeping and all the other responsibilities of trusteeship, but few have the resources to undertake investment administration on a day-to-day basis.

That’s where Mobius comes in. Mobius’ investment platform capabilities and infrastructure help professional trustees meet their administration and governance responsibilities. These range from core administration and execution capabilities, to providing bespoke data for transaction cost and TCFD reports. Using Mobius helps trustees demonstrate they have the resources and capabilities to meet their professional and regulatory responsibilities, particularly at a time when increasing regulation of the sector continues.

The shift to professional trusteeship is likely to continue over the coming years and we will continue to innovate and develop our services to meet the needs of our clients. To find out more, please contact one of our team today.

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