Why LDI at Schroders?
Our US liability-driven, or liability-cognizant, investment solutions are predicating on a value-driven approach and seek to correspond with actual liabilities by investing in a portfolio of investment grade, fixed income securities. Long bonds for long liabilities has been, and continues to be, a powerful theme of the investment process.
We believe an active approach can be quite additive to a US pension plan as it provides the ability to capitalize on imbalances in the relationships between sectors and individual bonds. We believe that investing in undervalued sectors and bonds and selling expensive ones is the ideal process to capture value in a manner that complements the “growth” portion of an LDI plan…. thus, improving funding ratios.
Our US LDI strategy typically invests in US dollar-denominated fixed income including Treasuries, government agency, corporate bonds, and even municipal bonds when it pays to do so. There is no exposure to currency risk, high yield bonds or emerging market debt. The strategy is duration neutral, meaning that portfolio duration is set in an attempt to meet client objectives and does not incorporate interest rate forecasts or speculation.