Standard Life Investments

How ILPS Works

How does ILPS work?

Each £1 in an ILPS fund has two objectives:

  • Hedging Portfolio To provide c.£2 protection (i.e. hedge) against changes in the value of liabilities arising from movements in interest rates and (in the Real Funds) inflation expectations; and
  • Growth Portfolio at the same time, to seek a return in excess of cash on the £1 invested in the portfolios.
    • Liability Aware Absolute Return III Fund (LA AR III) – based on our multi-asset return strategies targeting cash* +5% per annum over rolling three-year periods, with expected volatility of 4% - 8% per annum under normal market circumstances.
    • Liability Aware Absolute Return II Fund (LA AR II) – following the success of LA AR III, we launched our second range of ILPS solutions, using our LA AR II Growth Portfolio. LA AR II draws on ideas from the full fixed income universe and is based on our absolute return bond strategy. It works in the same cash-efficient way as LA AR III but targets cash** +3% per annum over rolling three-year periods, with expected volatility of 2% - 4% per annum under normal market circumstances.

To find out more about how ILPS works, click here.

*cash is defined as 6-month LIBOR
**cash is defined as 3-month LIBOR