Liability Driven Investing (LDI)

LDI can be particularly useful in managing defined benefit assets. It is an investment strategy that matches the plan’s assets to its liabilities. This portfolio immunization process aligns the portfolio’s cash flows to the plan’s liabilities which significantly reduce the exposure to market risk, and it can stabilize the plan’s funded ratio. Typically, a funded ratio glide path is determined and documented in the plan’s investment policy.