Aviva Investors Expands Fixed Income Team with Federated Hermes Pair

Aviva Investors has appointed two new members to its fixed income team, including Federated Hermes' head of global credit. The team will focus on credit strategies, including sovereign and corporate debt. The hires aim to enhance the firm's credit capabilities and provide clients with a broader range of investment options.

The Dutch pension system reform, scheduled to commence in January 2026, is poised to create a €2 trillion ($2.3 trillion) upheaval in European bond markets, according to financial experts [1]. This reform, aimed at addressing an aging population and changing labor market dynamics, has already sparked increased volatility and higher yields on longer-dated bonds.

The Dutch pension system, the largest in the EU, holds over €300 billion in European bonds, making it a significant market player. The reform involves a shift from long-dated swaps to life-cycle investing, which will reduce the need for these long-dated hedges. This transition will occur in tranches, with the first wave of 36 funds scheduled to switch on January 1, 2026 [1].

The transition's impact on the market is expected to be significant, with potential bottlenecks in liquidity and increased volatility. Investment banks and brokers may struggle to match sellers and buyers, potentially leading to illiquidity and market jitters. Hedge funds are positioning themselves to profit from this transition, which could exacerbate market conditions [1].

The political crisis in the Netherlands further complicates the reform's implementation. A snap election is expected after the collapse of both the government and a caretaker administration, raising concerns about the transition's timeline and potential delays [1].

Asset managers, including BlackRock Inc. and Aviva Investors, are advising caution regarding the long-end of the yield curve, favoring shorter-dated tenors. US Treasuries are becoming more attractive compared to European government bonds due to these uncertainties [1].

Aviva Investors, in response to these market dynamics, has appointed two new members to its fixed income team, including Federated Hermes' head of global credit. This move aims to enhance the firm's credit capabilities and provide clients with a broader range of investment options [2].

The Dutch central bank has expressed confidence that the one-year adjustment period will provide sufficient flexibility for pension funds to adjust their portfolios in an orderly manner. However, the market remains anxious, and many trading desks are positioning for a quick transition in early January [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-08-31/dutch-pension-reform-risks-turning-into-a-2-trillion-headache
[2] https://finance.yahoo.com/news/2-trillion-dutch-pension-headache-060334429.html