STOXX, the operator of Deutsche Börse Group’s index business, has partnered with RiskFirst, a provider of risk analytics and reporting.
Through the deal, STOXX, which provides innovative and tradable index concepts, has launched iSTOXX RiskFirst LDI index family. Jointly developed with RiskFirst, STOXX will said it will calculate a range of indices based on 12 profiles, capturing member type, duration, type of indexation (pre- and post-retirement), interest rate and inflation sensitivity and tax-free cash component of typical UK pension schemes.
The indices combine STOXX’s real-time fixed-income index calculation capabilities with a unique set of data provided by RiskFirst.
Matthew Seymour, CEO of RiskFirst, commented: “The set of indices we have developed in partnership with STOXX are a major leap forward, providing improved governance and increased accuracy in a cost-efficient solution. PFaroe is rapidly becoming an industry standard for the modelling of pension plans and therefore offers us unique insight into the behaviour of pension plan cash flow profiles at a very granular level. When combined with STOXX’s extensive experience in designing innovative and objective investment benchmarks, the result is a set of indices that deliver great value to UK pension plans.”
The iSTOXX RiskFirst LDI indices track the performance of corporate and government bonds denominated in GBP. They function as flexible, investable building blocks for LDI portfolios. Four different sets of indices are provided: nominal bond indices, inflation-linked bond indices, blended indices and non-gilt indices. The indices are constructed using a cash flow matching model that incorporates best-in-class LDI techniques.
Matteo Andreetto, CEO of STOXX, said: “With our new LDI index offering we are addressing the challenges of a £1trn market by providing independent benchmarks for liability-driven investments. Our LDI indices will support pension scheme trustees and consultants in their efforts to select, monitor and challenge LDI managers.”
RiskFirst is a financial technology company providing modern technology solutions to Asset Owners, Consultants and Asset Managers to help grow and improve their businesses. Their first product, PFaroe, was launched in 2009 to deliver an effective software solution for institutional investors to manage their asset and liability risk.
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