Introducing ‘Smart Rebalancing’

01 May 2020

Craig Brown Institutional Distribution Director

Author

Craig Brown
Institutional Distribution Director

Periodic rebalancing of a DB scheme’s assets to keep its overall portfolio in line with its chosen asset allocation and investment strategy is an essential part of keeping a scheme on its designated path.

Periodic rebalancing of a DB scheme’s assets to keep its overall portfolio in line with its chosen asset allocation and investment strategy is an essential part of keeping a scheme on its designated path.

For many schemes and their advisers, however, rebalancing has traditionally been a largely manual process with the associated transaction costs. Schemes also face the expense and potential out-of-market risks of transitioning assets between funds.

At Mobius Life we believe there is a better way. We have developed an innovative ‘Smart Rebalancing’ approach. This automates the rebalancing process, reducing risk and potential transaction costs for DB schemes.

‘Smart Rebalancing’ utilises the scheme’s cashflows each month to rebalance the scheme towards its benchmark holdings. We manufacture a blended fund for each scheme which reflects the liquid assets that would be included in the rebalancing process.

For cashflow-negative schemes we rebalance as the scheme draws down cash, for example, to pay pensions each month; this is achieved by automatically ‘topslicing’ the most overweight asset classes to pay benefits and bring the scheme back into line.

For cashflow-positive schemes, monthly contributions are automatically allocated to the most underweight asset classes.

‘Smart Rebalancing’ not only automates the rebalancing process but also significantly reduces the need for rebalancing at the quarter or year end. It also reduces risk and potential transaction costs for DB schemes.

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Mobius Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales at: 7th Floor, 20 Gresham Street, London, EC2V 7JE. Registered No. 3104978. For your security telephone conversations may be recorded.

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