Julien Halfon


“The market has not yet found anything liquid that can provide excess return and maturity at the same time.” Julien Halfon, BNP Paribas Asset Management


portfolio institutional: How important is cash-flow driven investing (CDI) to asset owners? Chetan Ghosh: We are heavy users of CDI assets. In 2011 we started building an allocation to long- dated assets that had secure, largely inflation-linked, contractual income. That now forms 11% of our portfolio. We have thought through the cash-flow problem beyond just holding long-dated assets and have a game-plan as to how shorter-dated cash-flow generating assets, like liquid corporate bonds, can form part of the solution. John Greaves: The Railways Pension Scheme was effectively only formed in 1994 so is still quite immature, even the sections of the scheme that are closed to new members. We are therefore building exposures to assets that lend themselves to CDI, but we are not yet managing them with a specific cash-flow profile in mind. It is very much front of mind though and our thinking there will evolve in the next few years.


PI: Is this the best way to tackle cash-flow negativity? Jon Exley: CDI is not fundamentally about negative cash-flow. The relevance to CDI is that being cash- flow negative is a sign of a more mature scheme that is approaching the end game and is generally better funded.


6 March 2019 portfolio institutional roundtable: CDI


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