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Pension Portfolios Annual Review

Thursday, March 16, 2017

Pension Portfolios

During Q1 ILIM completed their annual review and implemented four enhancements for all Pension Portfolios funds. In brief, the existing currency hedging process is now fully systematic, the very successful Low Volatility strategy has been extended to include Emerging Markets, there is now a small allocation to high yield bonds in the low/medium risk funds and the allocation to shares has been further diversified with an option strategy.


  • ILIM will track the performance of a recognised and leading high yield bond index.
  • The high yield bond allocation is currently sub-advised by an external manager.

Option Strategy

  • The option strategy further diversifies the allocation to shares (in addition to DSC and Low Volatility shares).
  • Options can reduce the impact of ups and downs in the stock market and aims to provide a more stable return over time.

Currency Hedging

ILIM manage the risk of exposure to foreign currencies in Irish Life Pension Portfolios by fully or partly hedging any exposure. In Quarter 1 2017 this risk management process was further enhanced by the development and introduction of a fully systematic currency hedging process. The strategy aims to reduce the risk of experiencing negative returns from foreign currency moves. This is achieved by hedging non-euro currency exposure when it is beneficial to do so.

Global Low Volatility Shares

The strategy aims to deliver share market returns with lower risk:

  • Focus is on minimising maximum losses
  • Low volatility shares were extended to include low volatility emerging market shares in Quarter 1 2017.
  • Stock selection is based on a range of low risk factors and defensive qualities.