CDS boost for pension funds

Pension fund managers have traditionally shied away from using credit derivatives. But in the current climate of ultra-narrow spreads, trying to outperform the market without using credit default swaps could prove to be a major handicap, as Sarfraz Thind discovers


With a huge pension fund deficit across Europe - at last count the pension fund gap in the UK alone stood at nearly £100 billion, according to Mercer Consulting - the pension fund sector is under intense scrutiny. While some fund managers have sought to address the problem through more tailored investment solutions, such as using more financial derivatives, pension funds have thus far lagged behind the wider buy side in applying derivatives to credit.

However there are signs that this

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