Helping you better manage the impact of your pension plan on your organization
Liability-driven investment (LDI) strategies include your plan's liabilities as an integral part of determining the right asset mix—a mix designed to more effectively manage key risk factors.
Russell LDI solutions...tailored to your needs Our long-term relationships with leading pension plans and ongoing research help us to analyze your situation and help you decide how to implement an LDI strategy.
Putting your LDI strategy into action Russell has a full complement of options to help you manage the impact of your pension plan on your organization. In the current market environment, spreads in long corporate bonds present an attractive opportunity to address interest rate risk mismatch. In the face of tremendous market volatility, you need a solution that provides a long-term strategic allocation with a goal of limiting surplus volatility. Using a mix of underlying fixed income strategies, Russell can help your team build a portfolio tailored to your specific interest rate management objectives. We can then help you assess the right strategic allocation of your remaining assets to help meet your plans' funding status.
Russell's expertise delivered in a custom LDI solution for you
Russell LDI Strategies If you're simply looking to extend the duration of your existing bond portfolio, we can help you implement an LDI strategy with a duration of over 10 years to help minimize interest rate risk.
Russell separate accounts If you choose to implement an LDI strategy synthetically, we can help you save transaction costs and streamline operations through a separate account.
Investment programs tied to your objectives Liability-driven investments are one solution that helps us create investment programs tied to your objectives. We also offer:
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets.
Interest Rate Management strategies contain certain risks that prospective investors should evaluate and understand prior to making a decision to invest. These risks may include, but are not limited to; interest rate risk, counter party risk, liquidity risk and leverage risk. Interest rate risk is the possibility of a reduction in the value of a security, especially a bond or swap, resulting from a rise in interest rates. Counter party risk is the risk that either the principal or an unrecognized gain is not paid by the counter party of a security or swap. Liquidity risk is the risk that a security or swap cannot be purchased or sold at the time and amount desired. Leverage is deliberately used by the fund to create a highly interest rate sensitive portfolio. Leverage risk means that the portfolio will lose more in the event of rising interest rates than it would otherwise with a portfolio of physical bonds with similar characteristics.
Bond investors should carefully consider risks such as interest rate, credit, repurchase and reverse repurchase transaction risks. Greater risk, such as increased volatility, limited liquidity, prepayment, non-payment and increased default risk, is inherent in portfolios that invest in high yield ("junk") bonds or mortgage backed securities, especially mortgage backed securities with exposure to sub-prime mortgages.
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