Category:

Defined Benefit

Humanoid robot with clenched left hand | Mobius
Innovation, Defined Benefit, Defined Contribution

Innovating to meet the needs of our clients in 2022

2022 has of course been a challenging 12 months for many. At Mobius we’ve worked hard to deliver another year of high-quality investment administration and we’ve continued to innovate to respond to the emerging needs of our clients. Highlights of the year include:

Preparing schemes for buyout with targeted basket of gilts holdings: We developed our capabilities to buy and hold a bespoke basket of direct gilts to support schemes moving to buyout with insurers. We have the ability to leverage our broker/dealer and custodian relationships to buy and hold direct gilts on the platform within our life company structure as part of a scheme’s transition to an insurer. We believe Mobius is the only institutional platform to offer a direct gilt purchase solution of this type.

Providing greater control to investment managers for private market and private equity transactions: Asset allocation exposures may benefit by exerting greater control over the timing and price limits of trading certain illiquid investments. We recognised the benefit this brings to solutions which Scheme CIOs or fund managers create, by allowing direct access to our broker/dealers. This gives them greater control, while providing comfort that all transactions and administration are processed and recorded on the Mobius platform.

Breaking down barriers to make real assets available to DB schemes: Many DB schemes seek returns from illiquid real assets such as sustainable assets, social housing, low carbon assets, healthcare, education and digital infrastructure. Yet for many smaller investors these are difficult to access due to the high levels of governance required and complex fund structures. We have innovated by using the power of the Mobius platform to make real asset strategies available to DB schemes.

Enabling schemes to exercise their proxy voting power: The government has made it clear schemes will be expected to use their voting power to support their climate change investment strategies. We worked with schemes to design solutions which enable them to vote on the shares they own. This pioneering approach is the start of enabling direct influence and is only possible due to Mobius’ investment administration capabilities.

Developing solutions for DC schemes: We have developed a solution offering a selection of manufactured funds designed to provide schemes with access to a wide range of sophisticated investment strategies which may not normally be available to them. We anticipate that the first clients will be able to utilise these strategies soon.

….and of course, there’s LDI: Like all parties involved, Mobius had to respond to the unprecedented spike in collateral calls following the mini-budget and subsequent turbulence in the gilt markets. The UK pensions industry has never experienced such a surge in the volume of trading activity coupled with accelerated and compressed timeframes. Mobius adapted to help deal with these unique circumstances, underlining the ability of our platform to flex to meet our clients’ needs.

Industry recognition: Finally, we were delighted to be recognised again with yet another pensions award. Mobius won the Institutional Investment Platform of the Year Award at the UK Professional Pensions Awards 2022. This is the fourth year in succession Mobius has won the award.

We couldn’t have won the award without the support of our clients and their advisers, who continue to trust us to deliver the highest standards of investment administration, so a massive thank you to all! We will continue to work hard to meet your needs in 2023 and to innovate to respond to changes and emerging demands in the pensions industry.

Wishing all of you all the best for the festive season and the New Year

See you in 2023 !

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Laura Catterick leading discussion amongst colleagues in investment meeting | Mobius
Investment Strategies, Defined Benefit, Defined Contribution

Making real assets accessible to all pension schemes

But the real shame is the advantages of real assets have often been harder for smaller schemes to access. Higher costs, illiquidity, lack of daily valuations and high minimum investment limits are seen as a barrier by many.

Now, with resurgent inflation, many smaller DB and DC schemes are likely to want to reconsider their position and benefit from the potential inflation hedges offered by some real estate and infrastructure investments.

The good news is the Mobius platform has the flexibility and capabilities to handle private assets and other illiquid investments for DB and DC schemes of all sizes.

We’ve invested in flexible technology which means we can host funds on the platform which are not daily priced – and we can report effectively on these assets to trustees and their advisers.

We’re also able to help ‘lower governance’ schemes to invest in private asset funds with high minimum investment limits. Our ability to aggregate holdings gives smaller schemes access to these alternatives on a cost-effective basis.

At Mobius we have the technology, flexibility and access to illiquid funds to help our clients reap the benefits today. If you would like to find out more, please contact us.

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James Finch, CEO | Mobius
Platform, Defined Benefit, Pension Strategy

Accessing alternative credit on-platform for DB schemes

The shift from traditional bank lenders as a result of tightening regulation since the global financial crisis, has resulted in the financing gap being filled by capital flows from private credit funds. It is a significant and growing market, driven largely by the search for higher yield. S&P Global reports the AUM of funds principally involved in direct lending grew to $412 billion by the end of 20201.

Typically, alternative credit involves non-bank institutions making loans to private companies. These businesses borrowing in the alternative market are usually mid-market private companies who struggle to access traditional bank finance. However, the expansion of private credit has resulted in a wide range of sub-asset classes covering direct lending, leveraged loans, distressed debt, securitised credit, consumer finance, real estate and infrastructure debt.

Private credit funds must undertake rigorous due diligence before investing, and as lending is privately negotiated, managers will generally seek seniority and stronger covenants. These allow investors to access higher yielding opportunities while mitigating some of the associated risks. The problem for many DB schemes however, particularly small to mid-size ones, is how to access and implement alternative credit funds. Investing requires significant levels of governance, the funds can also be illiquid with unique fund structures, and high minimum investment limits restrict access to only the largest schemes.

Now, Mobius has made a range of alternative credit funds available to DB schemes of all sizes on our platform. All the governance is undertaken at the platform level, meaning schemes do not have to jump through numerous governance hoops and cumbersome account opening documentation. Mobius takes on the implementation of these illiquid assets to manage the infrequent dealing cycles and valuations.

All implementation is carried out by Mobius, as we accommodate the complex dealing terms associated with the asset class.

Many DB schemes and their advisers can see the investment potential offered by alternative credit. Now the opportunity is available to far more schemes, thanks to the scale and flexibility of the Mobius platform and the continued investment in our infrastructure. If you want to know more, please get in touch.

  1. S&P Global: Private Debt: A Lesser-Known Corner of Finance Finds the Spotlight.
    https://www.spglobal.com/en/research-insights/featured/private-debt
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Stoneport Pensions | Mobius
Partnership, Defined Benefit

Stoneport selects Mobius as investment platform to host its investment funds for DB schemes

Stoneport runs a scheme that allows participating employers to retain a share of control in their investment strategy, whilst also being part of a consolidator vehicle that will enable them to target buyout in the longer term. Stoneport aims to have assets of around £2.5-£3.5bn once it has fulfilled its quota. Stuart Southall, an Independent Trustee of Stoneport, said: “We are delighted to be working with Mobius – the UK’s only truly independent institutional pension platform which is solely focused on delivering exceptional investment administration which accurately and cost-effectively implements schemes’ strategies.”

The appointment of Mobius is a major milestone for Stoneport and highlights how it can provide a first-class service to small schemes at affordable prices. The platform will host most of Stoneport’s investment funds – which small schemes will be able to access via Stoneport, without having to do their own market review. The appointment of Mobius will enable most small schemes to transition their existing funds to Stoneport easily. Stoneport appointed Mobius on the recommendations of the trustees’ adviser, Barnet Waddingham. Ian Mills, Partner and Senior Investment Consultant at Barnet Waddingham said: “We were delighted to advise the Stoneport trustees on their appointment of Mobius.

“The trustees asked us to look at ways that incoming schemes’ assets can be transferred in to Stoneport efficiently and then managed cost-effectively during the scheme’s growth phase. As independent advisers we considered a wide range of different investment structures to get the best possible results for our client, the appointment of Mobius will in-turn help the scheme reach its desired outcomes.”

Mobius said: “Stoneport has developed a truly innovative approach to small pension scheme consolidation, which will help to protect members’ benefits and reduce the cost and governance burden for sponsors.

“We are delighted that Stoneport has chosen Mobius as its investment administration platform. Our independent and innovative approach to delivering platform services offers Stoneport a highly efficient investment administration service. This will enable them to respond quickly to developments in investment strategy, transition and onboard additional schemes efficiently and benefit from rebalancing and de-risking opportunities as they occur.”

Small DB schemes with less than 1,000 members each are responsible for providing the retirement benefits of almost one million members, but these individuals are split across some 4,350 different schemes, nearly all separately administered.

Along with increased legislative pressures and a lack of scale to run efficiently, small schemes end up shouldering running costs of more than £1,000 per member, per year. This compares to less than £100 for the largest schemes.

Created and managed by Punter Southall, with actuarial, administration and investment advisory services provided by Barnett Waddingham, Stoneport is the only consolidator to offer a solution targeted at small schemes, who stand to benefit most from consolidation.

 

-ENDS-

 

For further information, please contact:
Mobius Life, Mike Lord
E: mike.lord@mobiuslife.co.uk
M: +44 (0)7831 401 311

Notes to Editors:
Mobius Life (www.mobiuslife.co.uk) Mobius Life is the market-leading institutional investment platform. Over 800 DB and DC pension scheme clients trust us to administer c.£25 billion of their members’ assets. We’re different to everyone else – we are independent, so our entire focus is on providing solutions for pension schemes.

Our clients benefit from the most innovative solutions in the market, driven by our award-winning ideas culture and can-do mindset.

Our track record of delivery is second to none which makes us the trusted partner of choice for UK DB and DC pension schemes. Mobius Life won the Institutional Pension Platform of the Year award at the 2019, 2020 and 2021 Professional Pensions Awards and the Pensions Age Innovation (Investment) Award 2021.

Stoneport is a consolidation vehicle for occupational defined benefit pension schemes in the UK with fewer than 1,000 members. It was conceived and developed by Punter Southall and will be managed by Stoneport Pensions Management Limited, a wholly owned subsidiary of Punter Southall. Barnett Waddingham provide administration services plus the actuarial and investment advisory services required to operate Stoneport. Stoneport will be regulated by the Pensions Regulator, just like the small schemes it provides a solution for.

Punter Southall has been developing new ways to transform people’s financial future, since 1988. We help our clients to discover and seize the right opportunities. By listening to them and understanding their needs, we change and adapt our portfolio of companies and services to help deliver their goals. We work with pension schemes, employers, insurers, charities, and private clients to provide expertise in pensions and investments, wealth management, workplace savings, health and protection, and financial data.

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Joshun Sandhu, Head of Investment Solutions & Partnerships | Mobius
Defined Benefit, Innovation, Investment Strategies

Hedging your equity exposure – bit tricky?

These appear to have had mixed levels of success and it begs the question – is there still a prominent place for equities given their inherent volatility? A hedged equity ‘shape’ can of course reduce the inherent volatility of equities whilst still giving an equity-like return.

Structured Equity is becoming increasingly popular with trustees as a way to capture these returns. It allows trustees to structure a growth asset which is individually tailored to meet their scheme’s desired return profile – while managing equity risk exposures.

Until now, the ‘catch’ with structured equity has been the expense and complexity of setting up an arrangement. Generally this is not an issue for large pension schemes with extensive governance and resources, but for smaller schemes the legal and governance costs, drain on management resources and minimum fees have put barriers in the way of them benefiting from structured equity.

Well, now that’s all changed. At Mobius, we’ve partnered with River and Mercantile (R&M) to make their structured equity solution available to schemes of all sizes.

R&M’s solution allows individual pension schemes to structure an asset to meet a defined return profile. It is an approach that can be used to dynamically manage equity risk exposure through different stages of the market cycle and increase the certainty of outcomes. Typical approaches include equity protection when markets fall, defined upside to meet target returns or leveraged equity exposure.

Unlike traditional investments, the underlying instruments are a set of contracts which define the investment return payoff for a given level of the equity market at maturity.

By manufacturing the structured equity solution on the Mobius platform we’ve stripped-out the cost and complexity, and made it available for schemes of all sizes. All of the infrastructure requirements, such as legal, governance, investment manager, custodial, collateral management and counterparty arrangements are already in place within our unit-linked life company.

Using our platform, schemes simply need to work with their consultants to define the exact shape of returns they require from equities to meet their funding requirements. We then set up and administer an individually tailored portfolio for each scheme on the Mobius platform.

Our approach to manufacturing funds is making more sophisticated and effective investment strategies available to all schemes. To date, we have created solutions to give schemes access to commercial property, multi asset, zero-fee true index and private asset strategies and there’s more to come It’s yet another example of the benefits to schemes of holding their assets on the Mobius platform.

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