www.the-actuary.org.ukhave to run your savings to zero before you get help from the Government. At least in the UK we have better provisions than they do.How can actuaries make their mark in fund management?I think they are two different areas of expertise and it is wrong for them to overlap. Actuaries should not be trying to be or beat a fund manager because a different skill is required. What is your view on liability-driven investment solutions for pension schemes? Are these products good value for money?People have been forced into it by an environment where a financial director, for example, might want to take the risk out of liability-driven investment structures. I would criticise the regime in which we have found ourselves. It is wrong to manage money on long-term liabilities with a short-term view. Over time, markets do tend to rise. The stock markets have not seen a very good start to the year. What are your market forecasts? I am quite pessimistic but it is difficult to tell if there will be a recession. If you are going from 3% growth to 0.5% then it is a very sharp drop and almost as bad as a recession anyway. The reason markets have not responded to the sharp reductions in interest rates is because they realise that earnings are likely to disappoint. Markets tend to lag behind consumer spending. They are just starting to slow now as is being reflected in corporate profits. Analysts have started to downgrade expectations and share prices have fallen. What do you think will be the next interest rate move in the UK? I think interest rates will go down in the UK but not as far as in the US. The Bank of England sees that inflation is high because of higher energy and food prices. In addition, the migration of production from the West to the East cannot go on forever so I believe interest rates may rise over the next few years. The Bank of England is not going to be able to bring inflation down easily. How do you monitor risk on your investments?It is more difficult to monitor risk than it used to be. On the big UK equity portfolios we used historical records but now I invest in alternative investments such as hedge funds or private equity. The quoted assets are easier to assess but some are not quoted and are much more difficult to analyse. Now we do much more qualitative work focusing on the managers8217 previous record. What made you decide to move into the alternatives market when you set up Bramdean Asset Management last year? It is an area that is not well-served at the moment. Swiss pension funds have, on average, 20% of their portfolios invested in alternatives, whereas in the UK it is only 3%. We are massively behind and it needs to come up the agenda. The providers are very fragmented and we wanted to provide a completely integrated service so that pension funds can allocate a total of 10% of the asset portfolio to all alternative asset classes. What words of wisdom would you like to share with aspiring actuaries? Keep your head down and work hard; you will be noticed. Avoid office politics and be as professional as you can. 187 I would criticise the regime in which we have found ourselves. It is wrong to manage money on long-term liability with a short-term view. Over time, markets do tend to rise 171187 To find out Nicola8217s views on women in the City and the work-life balance, visit www.the-actuary.org.uk/features187 To comment on this article, please e-mail editor@the-actuary.org.ukHaving it all?30 March 2008InterviewNicola Horlick Driving force (continued)187028_029_30_Actuary_Horlick_0308.30 3019/2/08 11:14:04
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