Fixed income strategies
Liability-driven investing (LDI)
Our offerings are designed to evolve with the changing needs of the plan, from long credit and capital efficient rates strategies to end-game solutions such as hibernation and pension risk transfer services.
Contact our team
Contact our team
What themes have we been seeing among corporate pension plans?
It’s been an exciting time lately for corporate pensions. The average funded ratio has risen to an overfunded position, and interest rates are now as high as they’ve been in over a decade. Because of this, a lot of plans are now looking to expand their Liability Driven Investing (LDI) programs to help preserve their funded levels.
At BlackRock, we manage over $300 billion in LDI assets globally1 …and we’ve helped pensions across regions in their de-risking approaches.
What we’ve seen is that many plans have established their base long duration exposures, but that there’s room to reduce funded ratio risk even further. Taking a closer look at the plan’s target hedge ratios, curve exposures, and even the types of LDI assets used can help avoid unintended outcomes and potentially improve risk adjusted returns.
At BlackRock, we think that plans can benefit from more flexibility in their fixed income buckets. This can include capital efficient Treasury funds, all the way through to private assets.
In this new regime of plan surplus positions, it’s common for plans to be asking, “what’s the right next step?” This requires finding partners with experience. Our LDI team works with clients to combine world class risk technology and pension expertise to help provide better outcomes for plan sponsors and their participants.
1 BlackRock, as of December 31, 2023.
What themes have we been seeing among corporate pension plans?
Matt Nili, Managing Director and Head of U.S. and Canada Liability Driven Investing (LDI) provides an update on recent themes we have been seeing among corporate pension plans.
Why BlackRock for LDI?
Our LDI platform provides defined benefit plan sponsors with the power and flexibility of one of the most comprehensive fixed income businesses in the world, combined with proprietary asset-liability focused technology.
LDI custom solutions
BlackRock’s flexible platform seeks to deliver a range of custom LDI solutions to meet client needs.
All potential solutions will start with an in-depth analysis of a client’s liability profile, including an analysis of sensitivity to both Treasury rate and credit spread movements.
We customize solutions to account for a number of client specific aspects, including:
- Custom asset-based benchmarks that approximate the duration and curve profile of the liability
- Liability cash-flow based benchmarks, where the portfolio allocation is monitored over time versus a client’s unique cash flow stream
- Completion management, where the portfolio allocation can “bridge” the gap between existing fixed income portfolios and a client’s unique liability cash-flows
As a pension plan moves through the plan lifecycle, we aim to offer thoughtful design, implementation, and monitoring to meet custom client needs. Custom solutions can also offer liability relative reporting to monitor the performance of assets to the underlying liability. For more information, we encourage a discussion with your BlackRock relationship manager and the LDI client PM team.
U.S. LDI Pension MarketWatch
Read our latest Monthly LDI Pension MarketWatch where we look at estimated average funded status and monthly market moves including treasury yields, corporate credit and inflation markets.
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BlackRock team
We believe our size allows us to invest in people and technology, creating comprehensive global coverage and thought leadership across regions.
BlackRock has a dedicated LDI team that develops client solutions in partnership with our portfolio management teams across our fundamental, systematic and index platforms.
Matthew Nili
Managing Director, Head of U.S. and Canada Liability Driven Investing (LDI)
Matthew Nili, Managing Director, is Head of the U.S. and Canada Liability Driven Investment (LDI) business.
Emojoy Brown, ASA, EA, MBA
Director, Client Portfolio Manager
Lynda Dennen Costello, ASA, EA
Director, Client Portfolio Manager
Elizabeth Perry, CFA
Director, Client Portfolio Manager
Candice Mogg
Director, Portfolio Manager
