Enhancing returns in CDI portfolios

Since the so-called Mini Budget of 2022, which resulted in a sharp increase in government bond yields, many defined benefit (DB) schemes have found themselves with much improved funding levels.

Such improvement in funding levels has led many schemes to reduce allocations to growth assets within their portfolios and increase allocations to matching assets. These increased allocations are principally investment grade corporate bonds and government bonds/LDI – often as part of a cashflow driven investment (CDI) strategy.

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The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.