Key takeaways:

• We believe defined benefit (DB) pension schemes should consider reviewing the investments in their liquidity portfolios to see whether expected returns may be enhanced in exchange for taking a modest amount of additional risk.
• As the market has priced in a front-loaded tightening cycle, this has resulted in higher yields and potential value at the shorter end of the yield curve, reviving opportunities to capture the credit risk premium. without compromising the liquidity of portfolios.
• Taking a global lens allows access to a far deeper pool of suitable investments, but also highlights the importance of risk management, including striking a balance between yield and liquidity.