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The author, a stalwart of the UK Asset and Liability Management Association, provides a guide to the construction and make‐up of bond indices and argues that users should assess them in great depth until they gain a proper understanding of what they will gain from their use.

This article has been withdrawn as it was published elsewhere and accidentally duplicated. The original article can be seen here: 10.1108/09657960410699667. When citing the article, please cite: Joseph Mariathasan, (2004), “Bond indices: understanding all the angles”, Balance Sheet, Vol. 12 Iss: 4, pp. 10 - 13.

Explains that derivatives sellers see insurance companies, because of their representation of some of the biggest financial groups, as a prime target worldwide. Goes on to show the part played by insurance companies using derivates. States that there are only 3 areas where options, generally, can be used in the context of investment management for the insurance companies: use by individual fund managers of stock options; transformation of wholesale products into retail products; and the use of options at balance sheet level. Summarizes that large insurance companies need to fit use of equity and bond derivatives within understandable policies.

The investment strategies which pension funds need to put into place are complex and, in recent years, have been changing rapidly. The author looks at how change is affecting the landscape and at what risk strategies need to be put into place as well.

Investment markets are becoming less rather than more efficient. The author argues that this is because qualitative analysis depends on individuals who are not objective but rely on value judgements which are sometimes successful and sometimes not. The results also depend on the particular individuals remaining within the organisation. The alternative is quantitative value management, which depends far more on independent number‐crunching and computer analysis.