Liability-Driven Investing (LDI) covers a wide range of investment solutions and products, all linked by the need to make investments which take account of investors’ future liabilities.
For investors such as pension funds and insurers, having a portfolio of assets and derivatives which closely tracks the changes in the value of their liabilities is a key component of their investment strategy.
Professionals from Aegon Asset Management's Investment Solutions Center work with our clients to assess the market risks to their liabilities, consider how much risk they want to mitigate, and develop portfolios of assets and derivatives to hedge those risks. Ongoing monitoring of both the liabilities and LDI portfolio ensures appropriate adjustments are made so that hedging is maintained as market conditions change and the liabilities evolve.
Increasingly investors are looking to dynamically change their hedging policies as market conditions change, for example by employing interest rate triggers. Aegon Asset Management's Investment Solutions Center plays a key role in devising dynamic interest rate hedging strategies and restructuring clients' LDI portfolios when triggers are hit.