When the P&I Liability Driven Investing conference started in New York in September, the audience of over 140 plan sponsors and consultants was rapt. Liability driven investing (LDI) is the new hot topic in the US pension world. Everyones talking about it, many confess not to understand the
full complexity of the issue, and few are actually implementing the strategy.
However, if the buzz heard during cocktails at the conferences conclusion is anything to go by, the number of plans employing LDI is set to swell soon.
The purpose of the conference, as introduced by conference moderator
Diane Garnick, was to educate the pension community about the concept and implementation of LDI. She explained succinctly that, "in an LDI environment risk is defined as the risk that the assets, and projected returns on those assets, will not meet future liabilities. This simple change in definition has myriad implications, which the speakers and panellists detailed over the following two days.
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