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    Liability-driven investment

    Liability-driven investment

    LDI is a governance and risk management framework which puts liabilities at the center of decision making. It recognizes that your risk and return objectives are best measured relative to your unique liability profile and that it is ultimately the outcome that matters to your beneficiaries.

    Addressing your changing focus as your pension plan evolves.

    Early in the life-cycle, plans tend to be open to new participants and have long time horizons before liability cashflows become due. Their investment goal may be simply to maximize returns while removing uncompensated liability risks.

    As liabilities increase, a plan’s funded status can have a significant impact on its sponsor’s balance sheet and required contributions. This often leads to a focus on managing funded status volatility by striking a balance between return-seeking and liability-matching assets.

    For maturing, closed and frozen plans, liabilities are largely crystalized and cashflows are more predictable. Plan sponsors tend to emphasize locking down the target outcome while efficiently meeting cash outflows.

    Whatever the circumstances of your pension plan, we believe we can help you achieve your goals with greater certainty.

    An LDI partner for your evolving needs

    With $745bn of LDI assets under management1, Insight offers a full range of LDI capabilities. Our outcome-oriented solutions built from specialized fixed income and derivatives expertise, help you to address your risk and return objectives along your de-risking life-cycle, minimizing the trade-offs you face.

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    Putting liabilities at the center of your decision making

    We offer a full set of liability risk management capabilities. These can be deployed as simple scalable ‘building blocks’, or we can fully customize a solution to meet your bespoke needs and unique liability profile.

    Your investment outcome and governance framework can be enhanced by applying a range of approaches. We can help you:

    • remove uncompensated sources of risk
    • make your investment strategy more ‘liability aware’ or implement a more comprehensive liability-matching program
    • fully ‘complete’ your liability strategy and hedge across multiple portfolios and asset managers

    We can add precision where it matters, including approaches that:

    • implement custom benchmarks to incorporate your discount curve
    • hedge the risks of more complex liability structures and profiles
    • manage assets directly to your liability cashflows
    • lock down your outcome with self-managed run-off portfolios (also known as ‘hibernation’ or ‘self-managed defeasance’)

    Our cashflow-driven investment (CDI) strategies seek to help you to meet your obligations as they fall due, without impairing your ability to generate your required return or to control liability risks.

    Many pension plans are now starting to pay out more than they take in. This has three important implications:

    • as assets shrink, percentage returns translate to lower dollar returns – meaning preserving assets and avoiding drawdowns can be crucial
    • as a plan matures, a shorter investment horizon makes the timing of returns more critical – with less time to recover any negative performance before liabilities fall due
    • as cashflow obligations come due, investors may be forced to sell assets to meet them – doing so in stressed market conditions can permanently damage the expected asset base and future return potential

    To meet these challenges, we can help you to:

    • generate cashflows required to pay obligations: this is achieved by sourcing assets and asset classes which generate contractual cashflows, prioritizing those with higher certainty of income and maturity proceeds
    • secure returns with greater certainty: by identifying and prioritizing assets high up in the capital structure and holding these investments to meet your liability outflows
    • reduce the mismatch between your liabilities and investment strategies: minimizing reinvestment and forced-selling risks

    We can help you set your strategic endgame target and adapt your portfolio to achieve your funding goal with greater certainty.

    Whether your target is buy-out or self-managed run-off (also known as hibernation or self-managed defeasance), our holistic framework seeks to increase the certainty of achieving your liability outcomes. It considers:

    • locking down the liabilities: Recognizing that it is difficult to invest against a moving target we can help you to lock down as much risk affordable or feasible through liability matching and hedging strategies
    • solving the deficit problem: We understand that many plan sponsors wish to mitigate or minimize contributions. We can therefore help you to build high-certainty solutions sufficient to deliver your required excess returns while controlling risk
    • managing uncertainty: We believe the most significant risk is the occurrence of a shortfall relative to achieving your strategic outcome. Investment strategies need to be resilient in the face of an uncertain future and that building solvency buffers are long-term desirable

    Whatever your pension plan’s ultimate objective, we believe applying this framework and managing the trade-offs you face on an ongoing basis will help you achieve your goal with greater certainty.

    Meet some of our team

    Our LDI capability rests on the experience of 114 fixed income investment professionals and 59 solutions specialists – with wide-ranging expertise across fixed income and derivatives markets, applied to pension risk and actuarial management1.

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    Sweta Vaidya, FSA, CFA, EA

    Head of Solution Design North America, Client Solutions Group

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    Sweta Vaidya, FSA, CFA, EA

    Head of Solution Design North America, Client Solutions Group

    Sweta is based in Insight’s New York office and, as Head of Solution Design North America, works on the design and delivery of investment solutions tailored to address client-specific risk, return and strategy objectives. Sweta joined Insight in July 2021 from Callan LLC, where she was Senior Vice President, Capital Markets Research. In this role, she consulted to a wide range of asset pools: corporate and public defined benefit plans, insurance funds, hospitals and health-care systems, and assisted with their strategic investment planning and fixed income manager structures.

    Prior to Callan, Sweta spent nine years at Willis Towers Watson as a director in the Investment Strategy Group where she performed asset/liability studies for some of the largest corporate pension plans in the US in order to determine asset allocation, set dynamic de-risking policies over time, settle liabilities and make funding policy decisions. She began her career in 2005 as an actuarial analyst at Watson Wyatt.

    Sweta received a BS (cum laude) in finance and actuarial science from New York University’s Stern School of Business. She is a Fellow of the Society of Actuaries (FSA), an enrolled actuary (EA) and a CFA charterholder.

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    Shivin Kwatra, CFA

    Head of LDI Portfolio Management

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    Shivin Kwatra, CFA

    Head of LDI Portfolio Management

    Shivin joined Insight in November 2017 as Head of LDI Portfolio Management for North America. Prior to this, Shivin was a senior portfolio manager at Goldman Sachs Asset Management, where he managed fixed income and LDI portfolios.

    He started his career within the Investment Bank at JP Morgan on the Structured Products and Derivatives Marketing team. He was a founding member of the pension advisory group at JP Morgan (which was acquired by Pacific Life) and Head of Direct Investments at Pacific Global Advisors (which was acquired by Goldman Sachs).

    Shivin holds a BSc in Commerce with a concentration in Finance from the McIntire School at the University of Virginia, where he was also the captain of the men’s golf team. He is a CFA charterholder and maintains Series 7 and 63 licenses from the Financial Industry Regulatory Authority and Series 3 license from the National Futures Association.

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    Andrew Catalan, CFA

    Head of Long Duration

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    Andrew Catalan, CFA

    Head of Long Duration

    Andrew is based in Insight’s New York office and is a senior portfolio manager specializing in liability-related investment solutions for clients. He joined Insight in May 2018 as a result of the transfer of Standish’s LDI team to Insight. At Standish, he was Managing Director & Senior Portfolio Manager responsible for overseeing the liability-driven investing group. His background at Standish from 2001 included global credit analyst responsibilities and subsequently Head of Credit Research.

    Andrew has held several positions across BNY Mellon affiliates, including high yield research analyst at The Boston Company and manager of strategic planning and business development for the asset management group. He also worked at Liberty Mutual in strategic planning and Bank of New England and Shawmut National as a corporate lending officer.

    He has a MSF from Boston College, a MBA from Suffolk University, a BS from Bentley University and is also a CFA charterholder.

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