Manulife AM Taps RiskFirst For Further LDI Expansion

PFaroe’s risk analytics will complement Manulife Asset Management’s current liability-driven investment (LDI) offering, enabling the firm to stress-test clients’ pension plans against economic and demographic assumptions and explore the impact of alternative portfolio allocations in order to drive more effective solutions. Manulife Asset Management runs approximately C$16 billion — approximately US$12 billion — in customized LDI strategies for North American pension plans.

“PFaroe is a flexible system that will complement our existing capabilities, allowing us to stress-test the impact of certain capital markets and economic assumptions across both assets and liabilities, run scenarios and look at value-at-risk in a more holistic manner," says Eric Menzer, the firm's global head of pension & risk management solutions.

"It also allows us to use this information to test alternative portfolio recommendations and understand their risk and return impact in the asset-liability space."

Fits with Proprietary

Menzer, who notes the firm's 17-year history working in the burgeoning LDI space, says the addition represents a next "critical step" in helping plan sponsor clients reduce funded status volatility, risks associated with large unexpected contributions and, ultimately, get to fully funded status.

"PFaroe is an easy-to-use tool that fits well alongside our already robust proprietary LDI modelling and investment management capabilities, giving us the flexibility to incorporate our own proprietary capital market outlooks and assumptions into the LDI investment decision making process," he explains.

Adds Matthew Seymour, managing director at RiskFirst: "Having PFaroe chosen by a team of this calibre is a huge endorsement of PFaroe and our on-going efforts to improve pension risk management. We are confident that PFaroe’s detailed and granular analytics will further enhance their customised services to clients.”