If LDI is so great, how come more plans aren't doing it?

February 2010
Employee Benefit News;Feb2010, Vol. 24 Issue 2, p36
The article explains why liability-driven investments (LDIs) are not gaining popularity in spite of the advantages it offers in terms of new regulation and accounting on funding pension plans. It attributes the reason to three basic human factors which are inertia, betting on interest rates and peer comparisons. It explains that people have been so used to an absolute return paradigm and need to shift to one that is liability-efficient. It says that LDIs, or assets that act like liability such as long bonds, are less risky than cash.


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