Liability Driven Investing
Aligning Asset Risk with Plan Liabilities
Liability-driven investing evaluates portfolio risk in relation to a plan’s ability to meet future benefit obligations, measuring risk in terms of funded status volatility rather than asset volatility in isolation. We help defined benefit plan sponsors manage the interest rate and return-seeking asset risks that contribute to funded status volatility through customized, risk-controlled LDI and de-risking strategies.
Portfolio Fit
Align Portfolio Decisions with Liability Risk
Our approach does not necessarily imply increasing the fixed income allocation; risk tolerance and return requirements determine the appropriate blend of liability-hedging and return-seeking assets. We work closely with clients, consultants and actuaries to understand the liability, customize a strategy, specify a benchmark and risk tolerances and develop portfolio guidelines.
Our LDI capabilities address three liability risks that shape the hedge:
Duration
Measures sensitivity to changes in interest rates. Portfolios may be designed to match liability duration or extend duration to pursue a higher hedge ratio.
Spread
Measures sensitivity to changes in corporate credit spreads. Credit exposure can be calibrated in relation to the plan’s broader asset allocation and return-seeking risk.
Yield Curve
Measures sensitivity to interest rate changes at different points along the curve. Portfolio construction is designed to reduce key-rate and cash flow mismatches relative to the liability.
ERISA Pension Risk Monitors
Monitor What Matters for Liability-Driven Portfolios
Access recurring NISA research and proprietary indices designed to support ongoing LDI oversight.
LDI Update
Monthly update on conditions affecting pension funded status and liability hedging programs.
PSRX® Index
Monthly estimate of funded status volatility and forward-looking risk.
PRT Credit Risk Monitor
Quarterly analysis of relative credit risk among common PRT annuity providers.
LDI Perspectives
Why NISA
Our Distinguished Approach
We partner with clients to build tailored solutions in pursuit of unique goals. Our style seeks consistent outcomes with high-quality, risk-adjusted returns.
Authentic Alpha
Actively managing specialized strategies across asset classes and markets, emphasizing diversification and proven processes that strive to deliver consistently high information ratios.
Beta Optimization
Capturing targeted market exposures efficiently, minimizing uncompensated risks and identifying opportunities created by structural gaps in market conditions.
Strategic Partnership
Cultivating enduring partnerships that reflect a deep understanding of client objectives with portfolios designed to deliver strategic outcomes.
Partner With NISA
Discuss Your Portfolio Objectives with Us
Portfolio losses are realized with the assumption that the client will use these losses to offset gains. To the extent the client does not have gains available to offset in the current period, the value of the tax benefit of such losses will be less than reported.