Liability driven investment (LDI)

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The emergence of LDI-based funding strategies probably represents the most significant development in pension fund investment over the last 15 years. We are proud of the part we played in introducing clients to this approach: helping them navigate new challenges and implement more effective and resilient long-term funding strategies.

Market turmoil at the turn of the millennium resulted in widespread funding deficits and revealed the extent to which conventional strategies were ineffective in controlling funding level volatility. We were one of the pioneers of a new approach: making funding pension benefits the key objective, and then directly managing the risks associated with delivering that promise. 

Pension funds may decide to use LDI strategies to focus on solving different problems. For example, less mature pension funds may use LDI to help manage funding level volatility, while more mature funds may focus on increasing the certainty that they can afford to pay out pensions over time.

Our approach to LDI allows clients to have greater confidence that they will meet their funding objectives with less uncertainty, yet without compromising return or raising long-term funding costs.

Over a period in which pension liabilities grew more than 50%, adopting an LDI approach has given pension schemes the opportunity to at least match the growth in the value of their future benefit commitments.

Our approaches

Segregated LDI solutions

A segregated approach to LDI often suits pension schemes looking for a flexible, capital-efficient solution that adapts to market changes. Our partnership approach allows us to build close relationships with both our clients and their advisers, helping them design and implement highly effective solutions that evolve through time, reflecting market conditions as well as their changing requirements.

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Pooled LDI solutions

Our LDI pooled fund range can provide the building blocks to construct a strategy tailored to your scheme's unique needs.

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Self-managed buy-in

Evolving your de-risking strategy to include longevity hedges and transitioning to assets that are more cash flow aware can help you to reach your endgame with more certainty.

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Please refer to the underlying fund or strategy page for details of the specific risks associated with investment.

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