27 Jul 2016 Meeting the boroughs’ cashflow challenge
Our investment team has been working on the basic building blocks of the broader cashflow-generating asset classes. The team has tasked several fixed income managers with considering ‘the cashflow challenge’ faced by boroughs (and indeed, the world over), and how they might assist the boroughs and the CIV by focusing on particular strategies. These thought pieces will be sent to the boroughs very shortly.
It is important to note that the engagement of certain managers in no way indicates that these managers will be selected or that other managers who have not written thought pieces will not be included. The pieces are intended to show the boroughs how the CIV and investment managers are approaching fixed income given the issue that many vanilla fixed income products are no longer suitable on account of the current market distortions caused in part by policy and regulation.
These basic building blocks will form part of a broader suite of strategies designed to address the likely need for boroughs to tilt their asset allocation towards cashflow generation. Our investment team is working on an updated investment strategy over the summer. The challenge is to produce a solution (or choice of solutions) which offer the boroughs a product which is bespoke to their individual liability-driven cashflow requirements, and which is more cost-effective than each borough going it alone, and which includes all relevant cashflow-generating asset classes (including infrastructure).