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Liability-Driven Investing

Our Philosophy

Standish believes:

  • A successful LDI solution requires closely aligning the asset strategy with detailed liability analysis.
  • Each client is unique, requiring a customized asset allocation solution. While using all available investment tools, the primary investment vehicle should be the cash bonds that are most highly correlated with the liabilities.
  • Liability analysis, combined with client guidelines and objectives, drives the tactical and strategic asset allocation.
  • The LDI framework is an iterative process that re-evaluates the optimal liability hedge given changing market conditions. This is done through regular consultation between the client and portfolio managers and client service professionals.

LDI Commentary

March 2013 - In our latest commentary, our Senior Investment Professionals share a statistical and qualitative review at Q1 2013 & Outlook for 2013.

May 2013 - In our latest whitepaper, we discuss our approach which positions LDI portfolios to benefit from both both rising rates and a shortage of long duration corporate bonds.

Our Investment Process

Standish Liability Driven Investing solutions are based on the sponsor's unique objectives. Our portfolio managers work closely with our investment actuaries and third parties to develop a custom solution.

1 Assess Situation2 Develop LDI Solution3 Implement LDI Solution4 Monitor LDI Solution
  • Plan status
    • Active
    • Closed
    • Frozen
  • Plan type
  • Asset allocation
  • Funded status
  • Liability structure
  • Contribution policy
  • Objectives / risk budget
  • Liability hedge ratios
    • Interest rate risk
    • Quality risk
    • Yield curve risk
  • Asset / liability analysis
    • Stochastic
    • Deterministic
  • Methodologies
    • Hedge surplus/deficit
    • Hedge liability return
  • Philosophy and team
  • Benchmarks
  • Duration management
  • Trading and execution
  • Risk management
  • Outlook and strategy
  • Portfolio characteristics
  • Performance
  • Asset / liability reporting
    • Asset/liability returns
    • PPA liability
    • FAS/IAS liability
    • Solvency liability
    • Funded status ratios
    • Term structures
    • Discount rates
    • Asset/liability duration

For more information on Liability-Driven Investing, please contact Chris Austin at caustin@standish.com