Interest rate investments, such as bonds, play a crucial role in diversifying portfolios that generate income and help preserve capital. Fixed-income investments also help mitigate the sensitivity of HOOPP liabilities to fluctuations in interest rates and inflation.

Interest rates are significant because they represent the cost of borrowing money over time, essentially what lenders charge borrowers. They also set a benchmark for investment decisions, indicating the required return above the current interest rate to justify taking on additional risk. For pension plans, interest rates directly impact the funded status as they are a key factor in determining the funded ratio calculation (which compares the Plan’s assets to its liabilities and is a key measure of the current financial health of the Plan). Generally speaking, rising interest rates improve funded ratios while declining rates reduce them.

HOOPP’s extensive bond portfolio includes mid-term, long-term, and inflation-linked bonds. These bonds provide government-guaranteed returns, serve as high-quality liquid collateral to support other investment activities, and diversify the Fund’s assets. Additionally, the bond portfolio can also generate returns through active management aimed at adding value.

What drives our portfolio strategy?

Learn more about HOOPP’s performance in our latest Annual Report.

Interest Rates leadership

Ray Tanveer

Senior Managing Director, Interest Rates & Cross Asset Thematic Investing