Volatility & LDI – 2015’s Most Popular 

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Over the course of 2015 I had over 6,500 views of my blog posts (across the WordPress and LinkedIn platforms, an average of around 18 per day) – hardly viral I grant you but something I’m quite pleased with, given the admittedly relatively niche content! Overall in three years of blogging I’ve now received around 15,000 views.

Not surprisingly, the most popular time for my blog to be viewed was 2pm on a Friday (I suspect that’s true of many blogs!) and the most popular single day was Friday 29th May with 141 views (the day I published this). All interesting information for deciding when to publish new content in 2016.

So what was most popular?

1. The future of LDI 

As illustrated by the KPMG annual survey,  the growth of Liability Driven Investment (“LDI”) strategies over the last decade has been pretty spectacular, from a handful of mandates a decade ago to over 1000 in 2015, with £657b of liabilities hedged.

I believe that data from the PPF 7800 index illustrates the crucial role that LDI has in risk management for defined benefit pension schemes, indeed I’d go as far as to say that you can’t effectively risk manage a DB pension scheme without LDI.

In this blog I took a quick look at 4 themes that I think will shape LDI over coming years:

  1. Basis risk
  2. Negative cashflow
  3. Deflation risk
  4. Regulation

Read more here.

2. What does the highway code say about investment strategy?

This blog that I wrote back in 2013 seems perennially popular. It takes a simple intuitive idea (driving to the conditions, and braking gradually, not all at once) and shows how volatility control techniques appeal to the same principles.

One suspicion I have however, judging by some of the sites referring viewers to this blog is that the links to the Highway Code are directing some people to the site who are searching purely for Highway Code related information! Of course, it’s entirely possible those people hung around and enjoyed what they read, but my guess would be that is unlikely.

One interesting lesson from this though is that we can try and use this kind of association in our favour on more related topics, to generate genuine views. I’m not SEO or digital marketing expert, but it seems intuitive that relevant and well-chosen tags, links and categorisations will help direct potentially interested readers to a site.
3. Market Volatility and how to deal with it 

August 2015 saw a sharp uptick in market volatility as equity markets saw substantial losses, this was on the back of a pretty exceptional period of low volatility going back several years.

I argued that the key points for institutional investors is to stay focused on their long-term investment objectives and avoid distraction of knee-jerk decision making. A pre-agreed investment framework can greatly help in this regard. Focusing on the long-term required return helps the cause here, and I illustrated in the blog how required returns over various time frames might be affected by market shock such as August 2015.

I also believe that going forward investment strategies will need to be able to weather considerably more volatility than we saw during the period 2010-2015. There is no “magic” formula for this, but the three strands of diversification, risk control and downside protection where feasible can help.

Overall I made 29 posts during the year, other topics I blogged about in 2015 but didn’t make the top 3 included: the rise of longevity hedging, my lunch with Myron Scholes, an audience with Sir David Brailsford, long-term asset allocation trends of UK pension funds and which asset managers post the best content on Twitter.
I’m looking forward to publishing more blogs in 2016 on topics that interest me. Thanks for reading and I hope the material continues to interest you.

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